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SINGAPORE ECONOMY

IE S'pore downgrades 2016 forecast for exports

Slightly more upbeat outlook for 2017; non-oil domestic exports in Q3 down 5.4% year on year

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Non-oil domestic export (NODX) performance for the full year is likely to be worse than the government earlier thought.

Singapore

NON-OIL domestic export (NODX) performance for the full year is likely to be worse than the government earlier thought. The good news is that the worst may soon be over on the trade front.

But until September, the NODX and trade were still in free fall. It extended its descent in the third quarter, leading International Enterprise Singapore (IE Singapore) to further shave its 2016 forecast for the NODX.

The NODX fell 5.4 per cent year-on-year in July to September, steepening the 0.2 per cent dip in the second quarter, according to the latest trade released by the trade promotion agency on Thursday.

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IE Singapore at the same time said it is downgrading the full-year forecast for the NODX, predicting it will drop 5.0 to 5.5 per cent in 2016, against the earlier projection of a 3.0 to 4.0 per cent fall.

Total trade, however, is tipped to decline a bit less than expected earlier - down 6.0-6.5 per cent instead of 6.0-7.0 per cent. This came after IE Singapore reported that trade tumbled 5.0 per cent in the third quarter, easing a little from the 5.7 per cent decrease in the second quarter.

The trade promotion agency is slightly more upbeat for next year, putting its hope on "improvements in the growth outlook for advanced and developing economies like the US, NIEs and Asean". "Oil prices are also expected to improve in 2017 on the back of a further moderation in the surplus in global oil production," it indicated.

Oil domestic exports tumbled 13.7 per cent in the third quarter, easing from a 18.0 per cent shrinkage in the previous quarter. They rose 4.1 per cent in volume terms, after a 14.4 per cent jump in the second quarter.

IE Singapore projected the NODX's growth to fall between minus one and plus one per cent in 2017. Total trade is likely to grow 4.0 to 6.0 per cent.

External demand had stayed weak in the third quarter, with NODX shipments still rising in only two of the 10 major markets. Except for Hong Kong and South Korea, exports fell in the rest of the markets, according to IE Singapore.

China, Indonesia and the US were the biggest contributors to the NODX's tumble in the third quarter. Shipments to China, Singapore's biggest export market, slipped 8.2 per cent after declining 9.1 per cent in the previous quarter.

IE Singapore noted that while the non-electronic NODX rose in the second quarter, both electronic and non-electronic NODX fell in the third quarter. Electronic NODX, which accounts for nearly a third of NODX, slipped 8.6 per cent, against a 5.1 per cent decline previously.

"The decrease in electronic NODX can be attributed to lower domestic exports of PCs (-15.9 per cent), ICs (-3.1 per cent) and parts of PCs (-16.7 per cent)," IE Singapore said.

Non-electronic NODX, which makes up 70.7 per cent of NODX, slid 3.9 per cent in the third quarter, dragged down by weaker shipments of petrochemicals (-19.9 per cent), structures and ships & boats (-97.2 per cent), and civil engineering equipment parts (-44.3 per cent).

The non-electronic NODX jumped 1.8 per cent in the second quarter.

IE Singapore also reported that non-oil re-exports increased 2.5 per cent in the third quarter, recovering from a 1.9 per cent drop in the previous quarter.

Total services trade inched up 0.1 per cent, easing from a 2.3 per cent gain in the second quarter. Services exports rose 0.2 per cent in the third quarter, after a 3.2 per cent rise.

"The rise in services exports can be attributed to the growth in travel (8.3 per cent), insurance (7.7 per cent) and telecommunications, computer and information (2.9 per cent) services," IE Singapore said.

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