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Non-oil exports shrink 5.9% in Feb, far below economists' expectations of 4.8% expansion

NODX for preceding month showed 12.9% rise; analysts point to Chinese New Year effect

Economists expect Singapore's exports to expand at a more moderate pace this year, after growth hit 9.2 per cent last year - the fastest pace since 2010.


AN UNEXPECTED decline in Singapore's exports last month surprised economists who were hoping for another month of growth amid the ongoing global economic upturn.

But it is too soon to tell if the contraction points to slowing export momentum, given that the timing of the Chinese New Year - which took place in February this year and January last year - muddied the data.

Still, most economists were already expecting exports - especially electronics shipments - to grow at a more sedate pace this year.

Non-oil domestic exports (NODX) shrank 5.9 per cent in February from the same month a year earlier, according to data released on Friday by trade agency IE Singapore.

This was sharply below economist expectations of a 4.8 per cent expansion, and also much weaker than January's 12.9 per cent rise.

February's slide in shipments - the first decline since September last year - can be partly attributed to the Chinese New Year effect, economists said. This is a common phenomenon in the first three months of every year," noted DBS senior economist Irvin Seah.

"This is particularly exacerbated by the fact that plants in China - a big market for Singapore manufacturers - will typically ramp up their production ahead of the Chinese New Year before shutting down their production entirely during the festive period.

"Indeed, that explains the 12.9 per cent spike in the previous month, followed by a 5.9 per cent dive in February. Plainly, if one averages the numbers for both months, we still have a decent 3.5 per cent expansion."

Mr Seah added that "choppy" NODX figures in the early months of the year "can be safely dismissed".

Others took a more cautious stance.

"The strong electronics upswing seen last year is starting to wane and the momentum has probably peaked," said Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye.

Both electronics and non-electronics shipments fell last month. Electronic NODX - a key growth driver for the economy last year - declined 12.3 per cent, on the back of a 3.9 per cent decrease in January.

Dr Chua and Ms Lee noted that Singapore's exports appear to be underperforming relative to other countries in the region including China, Vietnam and Korea, which reported much stronger export numbers over January and February.

However, it remains to be seen whether this slowdown will be borne out in the coming months.

Manufacturing data out on March 26 will offer a clearer picture of how Singapore's electronics sector is doing, they added.

"Our working assumption is that (Singapore's) manufacturing and export growth will slow, but remain positive in 2018 following the surge in 2017, as electronics loses steam."

Meanwhile, non-electronic NODX slid 3.4 per cent in February after a 20.7 per cent surge in the previous month, Friday's data from IE Singapore showed.

NODX to the majority of Singapore's top markets decreased in February, except the United States, Japan and South Korea. The decline was led by China, the European Union and Taiwan.

Economists expect Singapore's exports to expand at a more moderate pace this year, after growth hit 9.2 per cent last year - the fastest pace since 2010.

Mr Seah said Singapore is entering a more mature phase of the economic recovery cycle, which means it will be tougher to replicate the double-digit NODX growth numbers seen in some months last year.

UOB senior economist Alvin Liew noted that China's managed growth slowdown remains "supportive of export demand from Singapore", which will help boost the trade outlook.

"But a bigger downside risk . . . is that the United States' increasingly protectionist trade stance (the expected imposition of further trade tariffs on China after the steel and aluminium imports tariffs in March) could lead to a spiralling trade war, negatively impacting global trade and inevitably, Singapore's exports."