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Update: Quick takes: Fall in Aug NODX tips Singapore economy closer to a technical recession

Singapore's non-oil domestic exports (NODX) continued to be in negative territory in the third quarter.

SINGAPORE'S non-oil domestic exports (NODX) continued to be in negative territory in the third quarter.

NODX fell 8.4 per cent year-on-year in August to S$13.25 billion, following a 0.7 per cent decline in the previous month, due to a contraction in both electronic and non-electronic NODX, according to IE Singapore.

Here are some comments from economists:

Weiwen Ng, economist (Asean and Pacific) at ANZ Research:

"The Singapore economy is unlikely to see an export-led lift, with growth momentum in China wobbling and domestic demand in rest of EM Asia lacklustre.

"While the US recovery is firm, it has been led by the services sector rather than the goods producing sector, further constraining the activation of the US supply chain and contributing to the ongoing 'trade recession' in this region.

"For Singapore, the undershooting in growth with core inflation still benign (for now) would usually warrant an easing in monetary policy settings when the central bank (Monetary Authority of Singapore) next meets in October. However, MAS policy response is likely to be constrained by its focus on cost pressures arising from a tight labour market as well as higher debt servicing costs on rising rates."

Irvin Seah, senior economist at DBS:

"Poor export performance in August has pushed the economy closer to a technical recession. Headline non-oil domestic exports slumped by 8.4% YoY, after a 0.7% drop in the previous month. This is significantly higher than market expectations of a 3.5% decline."

"The ugliest part of the data set is the sequential month-on-month 4.6% decline in NODX. Not only does this wipe out the modest 0.2% gain from the previous month, it essentially has tipped the economy even closer to a technical recession. Note a technical recession implies two consecutive quarters of sequential (QoQ saar) decline in GDP."

"External headwinds arising from the deceleration in China's growth would be the key reason behind the dire outcome. Though the depreciation in the SGD may provide some valuation lift to the number, the drag from demand weakness has obviously dominated."

"PMIs of all key markets have turned southwards while the knock-on effects from the equity market turmoil in China and the impact of the yuan devaluation have yet to manifest in the headline number. These factors essentially underscored the dicey global outlook and contributed to the slump in demand."

"The economy is on the verge of a technical recession. It contracted by 4.0% QoQ saar in 2Q15, led by a 18.3% drop in manufacturing output. Indeed, the manufacturing sector is already in recession, having contracted for 3 consecutive quarters in year-on-year terms and for 3 out of the past 5 quarters on a sequential basis. Today's set of numbers will only add to the recession side of the scale."

UOB Global Economics and Markets Research:

"Singapore's non-oil domestic exports (NODX) fell 8.4% y/y (-4.6% m/m SA) in the month of August, worse than consensus estimates of a milder 3.5% y/y contraction."

"This morning, the SGD fell 0.3% upon the release of the poorer-than-expected NODX data to reach 1.4005/USD. Going forward, we remain cautious about the export outlook and therefore maintain our 2015 NODX forecast of a 1% contraction."