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Singapore non-oil exports extend double-digit drop for 2nd straight month in April; confounding expectations

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Singapore's exports extended its double-digit decline for the second straight month in April, surprising economists who had expected a milder drop.

SINGAPORE’S exports extended its double-digit decline for the second straight month in April, surprising economists who had expected a milder drop.

Non-oil domestic exports (NODX) fell by 10 per cent last month on the back of a high base a year ago, according to the latest report by Enterprise Singapore.

This followed a revised 11.8 per cent plunge seen in March, and came in below economist projections of a 4.6 per cent drop.

Economists are not expecting the gloom to lift visibly in the near future as new tariffs from the US-China trade war take effect and the global tech down-cycle continues.

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Prakash Sakpal, economist at ING Asia, noted that Singapore is among the front-line Asian economies to face the brunt of the recent escalation of trade tensions between the world's two largest economies.

"With trade tensions moving to the next level of more and higher tariff barriers, things could get even worse from here on," he said.

"Such a state of affairs will make it increasingly difficult for the Monetary Authority of Singapore (MAS), the central bank, to sustain its tightening monetary policy bias going forward."

Brian Tan, economist at Barclays, concurred that he expects the MAS to stand pat at its October meeting, as it did in April, as the growth outlook continues to remain uncertain.

He added that the persistence of the NODX weakness could lead to an official revision of Singapore's full-year growth forecast.

"We believe the Ministry of Trade and Industry could also downgrade its GDP (gross domestic product) growth expectations from its current base case of 'slightly below' the midpoint of its official 1.5-3.5 per cent forecast range when it releases its next Economic Survey of Singapore on May 21," he said.

The contraction in April came on the back of declines in both electronic and non-electronic shipments, making a broad-based export weakness.

Domestic exports of electronic products were down by 16.3 per cent in April, after the 26.7 per cent decline in the previous month. Integrated circuits (ICs), disk media products and parts of ICs contributed the most to the fall, by 21.2 per cent, 31.3 per cent and 51.7 per cent respectively.

Non-electronic exports decreased by 7.9 per cent in April, continuing the 7.1 per cent fall seen in March. Pharmaceuticals (-46.6 per cent), specialised machinery (-22.7 per cent) and petrochemicals (-13.6 per cent) contributed the most to the decline in non-electronic NODX.

Non-oil exports to the majority of Singapore’s top markets declined in April, except Hong Kong and the US. The decline was mainly due to the European Union, Japan and China.

On a month-on-month seasonally adjusted basis, NODX dipped by 0.6 per cent in April, following the previous month’s 14.3 per cent contraction.

Singapore’s total trade increased by 3.2 per cent over the year in April, as growth in imports outweighed exports.

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