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Singapore exports, the canary in the coal mine for Covid-19 impact, fall by 3.3% in January

SINGAPORE exports were back in negative territory in January 2020, dragged down by a double-digit drop in petrochemical shipments, according to figures released on Monday.

Non-oil domestic exports (NODX) fell by 3.3 per cent year on year in January, after December 2019 offered a brief reprieve from a nine-month contraction, with growth of 2.4 per cent.

The fall, which Barclays economist Brian Tan pointed out “was largely due to an unfavourable base effect”, was slightly gentler than private-sector watchers had predicted, although they noted that the January data precedes the full brunt of the global Covid-19 public health emergency on export markets, with OCBC Bank chief economist Selena Ling calling Singapore’s trade data the canary in the coal mine.

Electronic shipments - which have been a lead weight on NODX as the global tech cycle hit a downturn - shrank by a gentler 13 per cent on lower exports of integrated circuits, personal computers and telecommunication equipment.

January’s slide was less pronounced than the decrease of 21.3 per cent in December 2019, with Citi analysts Kit Wei Zheng and Ang Kai Wei arguing that the pick-up - in spite of the Chinese New Year holidays - “reinforces the motion of an uneven tech export driven recovery prior to the Covid-19 impact”.

Meanwhile, non-electronic exports dipped by 0.1 per cent, reversing course from their 11.5 per cent expansion in December. Trade agency Enterprise Singapore (ESG), which compiles the data, noted that the decline in non-electronic NODX in January "may partly reflect the seasonal effects of the Chinese New Year holidays" during the month.

On a seasonally adjusted month-on-month basis, NODX was up by 4.6 per cent in January to S$14.7 billion, building momentum from the previous month's growth of 1 per cent growth.

Yet, exports to six out of Singapore’s top 10 markets were down year on year in January 2020, amid softer demand from Hong Kong, the European Union and Indonesia. On the other hand, NODX to the United States, China, South Korea and Taiwan improved.

Shipments to emerging markets also shrank again, no thanks to the lower NODX to Cambodia, Laos, Myanmar and Vietnam; Latin America; and South Asia.

Suggesting that Singapore’s export recovery “may have been delayed yet again”, and warning that “it is still too early to call for a H2 recovery”, Ms Ling said: “The earlier stabilisation in the NODX growth story was mainly predicated on a modest improvement in global growth and demand, which appears to have been thrown off-track by the sudden Covid-19 outbreak and its attendant effects on business and consumer confidence.”

With the impact of Covid-19 expected to be seen from February, “the trajectory for trade has turned less positive, with spillovers from China’s factory closures expected to materially impact intra-regional trade flows”, said JPMorgan economist Ong Sin Beng.

“However, with factory reopening in China expected to be gradual, the risk is for more downside in February trade flows and possibly March.”

The Citi analysts wrote: “We keep a close eye on the extent to which exports - especially for tech - is hit by a likely softening in external demand and supply disruptions.”

Year on year, total trade declined by 3.1 per cent in January 2020, eroding the previous month’s 0.7 per cent uptick, on decreases in both exports and imports.

ESG on Monday trimmed its forecast for full-year NODX. The yearly change in 2020 NODX is now expected to range between a 0.5 per cent decrease and a 1.5 per cent rise.