Quick takes: Singapore's July NODX fuels concerns over Q3 GDP growth momentum

SINGAPORE'S non-oil domestic exports (NODX) declined 0.8 per cent year on year in July 2015 to S$14.26 billion, compared to the 4.5 per cent growth in the previous month, due to a decrease in non-electronics exports.

According to trade agency International Enterprise Singapore on Monday, NODX to all of the top 10 markets, except Hong Kong, South Korea and Thailand, declined last month. The top contributors to the contraction were Japan, Taiwan and China.

Here are some economists' comments:

Joseph Incalcaterra, economist, HSBC Global Research:

"We think Singapore's NODX will see tepid sequential growth at best in the second half of 2015, which will keep manufacturing output depressed. Moreover, the renewed downturn in oil prices implies new risks to energy-related exports: in particular to petrochemicals in the short-term and marine & offshore engineering in the longer term."

"We forecast growth of 2.1% in 2015, and expect MAS to keep policy settings on hold, although the risks of band widening have increased over the past week."

Selena Ling, head of treasury research & strategy, OCBC Bank:

"NODX fell 0.8% yoy (+2.4% mom sa) in July, better than our estimate for -2.5% yoy (-0.1% mom sa), but below market consensus forecast of 0% yoy (-0.1% mom sa), while the June data was also revised down slightly to +4.5% yoy (-2.7% mom sa).

"This brought the NODX growth for the first seven months of 2015 to 2.7% yoy, but we expect a further softening in the remaining five months of 2015 due to a relatively higher base in 2H14.

"Our 2015 NODX growth forecast remains at 0-2% yoy, with 3Q NODX growth tipped at a weak -2.0% yoy.

"Our 3Q and full-year GDP growth forecasts are +2.0% yoy and 2.2% respectively. This compares with the official revised 2015 NODX and GDP growth forecasts of 1-2% and 2-2.5% yoy respectively."

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

"The decline in July NODX brought back concerns on the recent global growth slowdown, particularly on the lackluster growth in China's manufacturing sector over the past few months, where we have seen benign PMI, production, and export numbers.

"We now think that the impact of PBoC's (People's Bank of China) action last week on Singapore's export sector would probably be minimal as the PBoC had reiterated that the bulk of the 'adjustment appears to be over'. Although the SGD gained 1.2% against the RMB since the PBoC devaluation move to date, it is still 3.3% lower against the RMB compared to the start of this year.

"Going forward, we remain cautious about the export outlook and therefore maintain our 2015 NODX forecast of a 1% contraction. On 11 Aug, the trade agency had also revised their 2015 NODX growth forecast to 1%-2%, from 1%-3% earlier."