Quick takes: Singapore economy still vulnerable to global trade recession

SINGAPORE'S non-oil domestic exports (NODX) bounced back from a sharp 8.4 per cent year-on-year fall in August to post a small 0.3 per cent rise last month.

Here are some quick comments from economists:

Weiwen Ng, economist, ASEAN and Pacific, ANZ Research:

"While Singapore NODX edged up marginally in September, the economy is still vulnerable to the ongoing trade recession which threatens to push her closer to the brink of a more generalised economic slowdown, given her high leverage to the global trade cycle."

"This vulnerability is evident in the contraction in NODX in key markets - China, the US, South Korea, Taiwan- particularly on electronics."

"We still see a significant risk that Q4 growth might turn out to be worse than Q3 on weak external demand and the absence of support from the services sector."

"The slight calibrated policy easing from MAS (Monetary Authority of Singapore) supports our view that the delta of engaging in a currency war in an environment of weak global growth is likely to be marginal at best and hence tactically undesirable."

"We expect the trade recession to bottom out in Q1 2016 and that is consistent with MAS's expectation of cyclical headwinds persisting till early 2016."

Francis Tan, economist, Global Economics & Markets Research, UOB:

"The upside surprise in September NODX helped to allay some fears that Singapore may continue to experience contraction in exports until the end of the year, which could also see fears of 'technical recession' being re-visited in the upcoming final estimates of Q3 GDP to be released in November.''

"It was also hopeful that the slight easing by the MAS on 14 Oct could help support some incremental export volume in the months ahead. However, with Singapore's relatively high import content that resides within its exports, the slower appreciation in the SGD NEER may have limited positive impact on final export demand. The more important aspect for us to observe a significant increase in exports will be income growth in our key exporting destinations, namely: China, Malaysia, Indonesia, and the US."

"However, the on-going global growth slowdown that is tied to the lackluster growth in China, our top exporting country, as well as the deflationary trend in commodities continues to pose risk to Singapore's NODX in the coming months. We remain cautious about the export outlook and therefore maintain our 2015 NODX forecast of a 1 per cent contraction."

Selena Ling, Head of Treasury Research & Strategy, OCBC Bank:

"Still a very divided performance for the top 10 NODX markets - NODX grew in 5 markets led by Japan, Thailand and Indonesia, whereas NODX fell for the other 5 markets which accounted for 45.9 per cent of total NODX (namely China, US, South Korea, Taiwan and the EU28). Notable was the third consecutive month of deterioration in NODX to China (Sep: -12.9 per cent yoy), while Japan saw a strong bounce back in NODX at +23.4 per cent yoy."

"Too early to tell if the upward NODX momentum can sustain in 4Q15. The upside surprise in the September NODX has lifted the 3-month moving average NODX growth to -3.0 per cent. While this is better than the 5.3 per cent yoy NODX contraction we had initially penciled in, the real test of the pudding would be the coming months to see if the uptick lasts, especially for electronics exports. For the full-year we're still likely looking at a base-case scenario of flattish NODX growth for 2015."