Singapore - Unexpected 4.5% fall in Singapore exports

Singapore's exports fell unexpectedly last month, in another sign that the economy here may be slowing more sharply than earlier believed.

Non-oil domestic exports shrank 4.5 per cent last month, compared with September last year, far short of the 3.5 per cent expansion that private sector economists had been forecasting.

Data from trade agency IE Singapore showed that electronics exports again led the drop, slumping 13.6 per cent last month compared with the previous year.

This follows a 19 per cent decline in August when exports still managed to expand 3.9 per cent overall.

Reflecting the weak global economy and demand for electronics, exports of disk drives crashed 54 per cent, integrated circuits parts dropped 29.5 per cent, and diodes and transistors contracted 17.1 per cent.

And unlike in previous months, there was little support from the non-electronics sector, after exports in that sector grew by just 0.9 per cent last month.

Pharmaceutical exports rose 12.5 per cent but this was offset by an 8 per cent decline in petrochemicals.

More tellingly, exports to Singapore's biggest markets continued to plunge as the European debt crisis kept unfolding.

Exports to Europe fell 22 per cent last month compared to August, in seasonally adjusted terms, while exports to the United States and Chinese markets fell 7 per cent and 9.1 per cent respectively.

Economists warned that Singapore's exports and economy face strong headwinds and risks in the coming months, noting that non-oil domestic exports slid 9.3 per cent last month, compared to August. UOB economist Chow Penn Nee said the "remaining months of the year and into next year, exports should continue to remain tepid on softer external demand".

The weaker outlook also prompted CIMB economist Song Seng Wun to cut his export growth forecast to 5 per cent from the previous 5 per cent to 6 per cent range.

But other economists such as Citigroup's Kit Wei Zheng and Barclays Capital's Leong Wai Ho were more optimistic, noting that the rate of slide in electronics exports was slowing down.

Mr Kit noted that the S$5 billion (US$3.9 billion) electronics exports last month is the highest monthly figure for the year, showing that "electronics exports are stabilising".

"Rising tech exports to Malaysia and Hong Kong may hint at restocking within the regional electronics supply chain, though final demand from the US and EU remains weak," he added.

"If sustained, this should set the stage for a fourth quarter, quarter-on-quarter expansion."

Mr Leong also pointed out that demand and prices are expected to pick up ahead of the launch of new electronic products during the peak year-end sales period.

"As for the biomedical cluster, we expect production to slip slightly but remain at a fairly high-value mix of patented compounds, as the concentration of biologic drugs increases following capacity additions by Lonza and GlaxoSmithKline," he said.

Aaron Low

The Straits Times

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