The Business Times

Singapore January non-oil exports fall 10.1% for worst showing in over 2 years

Published Mon, Feb 18, 2019 · 12:36 AM

SINGAPORE'S trade sector began 2019 on a whimper with non-oil domestic exports (NODX) for January sliding a worse-than-expected 10.1 per cent from a year ago, as both electronic and non-electronic shipments shrank.

Economists polled by Bloomberg were expecting a 3.5 per cent drop, while analysts surveyed by Reuters expected a 1.6 per cent decline, given the high base effect of January 2018 when exports rose 13 per cent.

The drop in January 2019 was the biggest since October 2016's 12 per cent slump, and comes after a 8.5 per cent fall in December last year, as well as a 2.8 per cent decline in November.

Selena Ling, OCBC head of treasury research and strategy, noted that January's figures "continued to disappoint", with the magnitude of the decline reinforcing that 2019 is starting on a "soft footing for trade".

Exports of electronic products were down 15.9 per cent year-on-year in January, after an 11.2 per cent decrease in the previous month, Enterprise Singapore figures released on Monday showed. Contributing the most to this decline were contractions in exports of personal computers (-34.3 per cent), disk media products (-29.2 per cent), and integrated circuits (-6.8 per cent).

Exports of non-electronic products declined 7.9 per cent, continuing the previous month's 7.4 per cent fall. This was due most to falls in exports of specialised machinery (-32.8 per cent), petrochemicals (-11.8 per cent) and non-electric engines & motors (-40.9 per cent).

Robert Carnell, ING's chief economist and head of research, Asia-Pacific said: "Although it looks bad, and there is a temptation to draw a very negative conclusion from today's figures, there is a chance that we are seeing the seasonal low for electronics. These have a tendency to trough in February, posting lower figures than today's S$3.4 billion January figure in 2018, 2016, and 2015. A slight shifting in the seasonal norms for electronics might have brought forward the low point this year to January, and means we could see a bounce in February."

But he added: "That said, any such seasonal bounce might prove very short-lived, and the negative petrochemical result is very worrying. This points to a broad weakness in external demand, with these products ubiquitous in almost all production and packaging.

"Any bounce in electronics may be short-lived against a much wider downturn in demand, and the government's budget due out later today will likely need to incorporate some offsetting measures to stimulate the domestic economy in the face of mounting external weakness."

Shipments to all of Singapore's top 10 markets declined last month, led by China (-25.4 per cent), South Korea (-31.4 per cent) and Hong Kong (-11.7 per cent).

"Understandably, North Asian markets were likely most impacted by the US-China trade tensions, but other regional NODX markets were also soft in January," said OCBC's Ms Ling.

Shipments to China, Singapore's single largest market, contracted by 25.4 per cent in January, after the previous month's 15.4 per cent expansion, led by non-monetary gold (-94.9 per cent), specialised machinery (-55.2 per cent) and measuring instruments (-40.9 per cent).

Exports to the US reversed course to fall by 4.6 per cent in January, after rising 31.1 per cent in December.

Nonetheless, DBS economist Irvin Seah said: "While the numbers do suggest an export downcycle on the surface, it was partly weighed down by the high base last year. In contrast, China's exports surged by 9.1 per cent y-o-y in Jan 19. Before turning overly bearish, it may be worth considering the possibility that purchasing managers may have cut back on their orders too drastically when the trade war was at its worst."

On a month-on-month seasonally adjusted basis, NODX was down 5.7 per cent in January, following December's 4 per cent decline, due also to falls in both electronic and non-electronic NODX.

For 2018, figures released last Friday showed NODX growth slowed sharply to 4.2 per cent from 8.8 per cent in 2017, with exports dipping 1.1 per cent in the final quarter of 2018. Enterprise Singapore has maintained its growth forecasts for NODX at 0 to 2 per cent for 2019.

Said OCBC's Ms Ling: "Our 2019 NODX forecast is -0.2 per cent y-o-y, which is slightly lower than the official forecast. We'll have to see the February performance for a better picture of the Q1 19 NODX performance, given that January-February is typically volatile due to the timing of the Chinese New Year festive season too. Pending the outcome of the US-China trade talks and if the March 1 deadline for the 90-day truce for fresh tariffs will be extended, the soft NODX patch may potentially drag beyond March into Q2 19."

UOB economist Barnabas Gan said that "US-Sino trade tensions and its negative spillover effects to Asia's external environment remains the biggest wildcard for Singapore's trade outlook".

"The ongoing global tech cycle slowdown, should it sustain into 2019, will likely inject further growth headwinds to Singapore's electronics export space. The bright spots however, remain to be the ongoing strength in Singapore's pharmaceutical exports, although we note that pharmaceutical exports have been volatile in nature," Mr Gan added.

UOB is keeping its full-year NODX growth outlook at one per cent.

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