Quick takes: Singapore growth outlook still weak

SINGAPORE'S non-oil domestic exports (NODX) growth in August 2016 was flat at S$12.7 billion after a 10.6 per cent year-on-year drop in July, according to International Enterprise (IE) Singapore on Friday.

The increase in non-electronic shipments last month outweighed the decline in electronic exports, IE Singapore said.

Total trade rose 0.6 per cent to S$71.5 billion in August, in contrast to the 11.4 per cent decline in the previous month.

Here are some economists' views:

Nomura:

"The improvement partly reflects favourable base effects. On a sequential basis, seasonally adjusted NODX still fell by 1.9 per cent month-on-month (m-o-m) in August, the same pace of decline in July.

". . . both seasonally adjusted electronics and non-electronics exports fell sequentially, similar to July. However, favourable base effects helped to moderate the year-on-year decline in electronics exports to -6.0 per cent from -12.9 per cent in July. Year-on-year non-electronics export growth also surprisingly turned positive, rising to 2.7 per cent from -9.5 per cent.

"Overall, we continue to see the growth outlook as weak and forecast gross domestic product (GDP) growth of 1.4 per cent for the full year, slowing from 2.0 per cent in 2015.

"We continue to expect tepid global growth, especially given signs of faltering growth momentum in the US.

" While there has been a pick-up in electronics output, we are also cautious over its sustainability, as we expect Asia's electronic parts production cycle to peak in Q3."

ANZ Research:

"Our core view at present is for no change in policy at the upcoming MAS October policy review. While economic activity remains subdued, we do not see a significant deterioration in the near term growth and inflation outlook that will justify an easing move at this point.

"With the policy stance already at neutral, the next easing move would involve a re-centring lower of the policy band. Typically, for this to occur, there needs to be another material downward revision to MAS' assessment of growth and inflation.

"However, the Singapore exchange rate is elevated in real effective exchange rate terms and inconsistent with domestic fundamentals. MAS could decide to ease policy further in the absence of a material change to the outlook just to weaken the currency to bring it more in line with fundamentals."

UOB:

"Every month when it comes to NODX data releases, consumers and businesses will still go away with a confused look after reading the report. Their key question remains: 'So are we on an up or down trend?'

"We used one of the tools commonly-used in the field of economics to remove the 'noise', and found that the trough of the current period of NODX weakness was from Oct 2015 to Jan 2016, and it had been improving since.

"That said, HP-filtered NODX data does not imply certainty that Singapore's trade numbers will get stronger. Should there be a large economic/financial shock, it may still change this improving path.

"We maintain our full year NODX growth forecast of a contraction of 2.5 per cent. This implies that NODX over the next 4 months should average a growth of 2.0 per cent, compared to the average 4.7 per cent year-on-year decline in the first 8 months of this year."

OCBC:

"Looking ahead, NODX performance is likely to stabilize but remain choppy in the months ahead. The modest pickup in US economy, mitigated by sluggish growth in the Eurozone and Japan, and continued deceleration in China, point to a greater reliance on regional trade momentum driven by domestic demand at this juncture. We tip 2016 NODX growth to be -4% yoy, with the year-to-date currently running at -4.1% yoy."