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Singapore exports post 4th month of double-digit decline with 17.3% plunge in June

Singapore’s exports, already in double-digit decline for three straight months, fell again in June, according to Enterprise Singapore data released on Wednesday morning.

SINGAPORE’S exports, already in double-digit decline for three straight months, fell again in June, according to Enterprise Singapore data released on Wednesday morning.

Non-oil domestic exports (NODX) were down by 17.3 per cent on the year before - a six-year low and steeply worse than the drop of 9.6 per cent predicted by private economists in a Bloomberg poll.

June export figures - coming after May’s preliminary drop of 15.9 per cent was revised down to 16.3 per cent - are being hotly watched for implications on second-quarter economic data.

Recent flash estimates, based on April and May numbers, showed that the Republic’s gross domestic product (GDP) notched tepid growth of 0.1 per cent in the second quarter - and analysts are waiting for clarity on whether that figure could be downgraded in the final print.

Electronic shipments, which have been on a broadly downward jag since December 2017, continued to worsen. Exports in this segment posted a contraction of 31.9 per cent - their worst showing since 2009 - even as May’s figures were revised a hair’s breadth lower, to a plunge of 31.6 per cent. Shrinking exports of integrated circuits, personal computers and disk media products fed the drop.

Meanwhile, non-electronic shipments were down by 12.4 per cent year on year in June, worsening from 11.1 per cent in the month prior, on the back of lower gold, petrochemical and pharmaceutical exports. The drop in petrochemical exports widened from 14.7 per cent in May to 16.7 per cent in June, while the volatile pharmaceutical sector posted a fall of 11.3 per cent after gains of 28.5 per cent the month before.

DBS senior economist Irvin Seah noted that electronics exports and growth have suffered from the supply-chain disruption in the US-China trade war, coupled with a cyclical downturn in the sector.

“The latest spat between Japan and Korea in the supply of electronics materials has further added salt to (the) wound,” he wrote in a note.

Save for the United States, non-oil exports to Singapore’s other top 10 markets fell again in June, led by Hong Kong, mainland China and the European Union.

On a seasonally adjusted, monthly basis, NODX slid by 7.6 per cent to S$12.9 billion, against an increase of 5.8 per cent in the month before.

Total trade decreased by 7.2 per cent year on year in June, as both exports and imports fell. The slip in May was revised downwards to 2.2 per cent, from 2.1 per cent before.

Official expectations for Singapore’s export growth were cut in May, when the outlook was downgraded to a range of between flat growth of zero and a 2 per cent decline.

Barclays economist Brian Tan wrote in a morning note that first-half gross domestic product (GDP) growth will likely be “well short of the authorities’ expectations”, with “the output gap set to slide into negative territory”. “Overall, the weakness in NODX appears to point to poor industrial production in June,” he added.

“Today’s set of figures follows a long string of awful data in recent months, and there is no respite at the moment,” Mr Seah, from DBS, remarked.

But Maybank Kim Eng senior economist Chua Hak Bin told The Business Times that “we’d rather wait for the June manufacturing data”, to put to the test the “rather severe 8.7 per cent plunge in implied industrial production” suggested by second-quarter GDP estimates.

Preliminary factory numbers for June will be put out by the Economic Development Board next week. But, based on recent public comments, Singapore’s political leaders show “a reluctance to think that this could be a protracted or severe contraction”, Dr Chua opined.