FocusSingapore's non-oil domestic exports to remain weak – analysts

18 October 2012 05:42  [Source: ICIS news]

SINGAPORE (ICIS)--Singapore’s non-oil domestic exports (NODX) is expected to remain volatile through the end of this year amid poor external demand and falling shipments to major economies, analysts said on Thursday.

The city-state’s NODX slipped by 3.4% year on year in September this year, against market expectations of a 2.8% growth, because of the larger contraction in electronic NODX which outweighed the rise in non-electronic NODX, they said.

The decline in September NODX follows the 10.7% year-on-year decline recorded in August.

“[The] back-to-back decline in electronics exports cancelled out the increase in non-electronic exports,” said Maybank Kim Eng Research.

Singapore’s export to major economies remained weak amid mixed performance in shipments across east Asia, it said.

Among the major economies, shipments to the EU which accounts for 14% of Singapore’s NODX was the biggest drag as it shrank by 15.7% year on year in September – the third straight month of decline.

The city-state’s NODX to US slipped by 7.2% year on year in September, while shipments to China grew by 1.8% following a 4.5% contraction in August.

Singapore’s non-electronic NODX, which includes chemical and pharmaceutical shipments, rose by 4.2% year on year in September, while electronic NODX fell by 16.4%, according to International Enterprise (IE) Singapore data published on 17 October.

The country’s petrochemical exports rose by 5.5% year on year in September, continuing on from the 1.1% increase seen in the previous month, it said.

However, its shipments of primary chemicals fell by 19% year on year in September while exports of pharmaceuticals slipped by 3.0% year on year, it added.

The continued weakness in electronics demand and sluggish production in Singapore’s pharmaceutical segment have jointly contributed to the poor export performance in September, according to Singapore-based DBS Group Research.

“The festive season effect probably has not kicked in and hope is now pinned on the export sales numbers for the coming two months to deliver that. This could bring about better electronics sales but risk remains given the global economic doldrum,” it added.

Short-term lead indicators are showing an inconsistent trend, which is pointing towards volatile NODX in the coming months, said Maybank Kim Eng Research.

Singapore’s purchasing managers’ index (PMI) for new export orders dipped to below 50 for only the second time this year in September, at 49.4, following the figure of 50.4 recorded in August, it said.

However, the PMI for electronics new export orders edged up to 52.5 in September from 50.4 in August, the firm said.

“Poor external demand continues to show up because of weak NODX numbers. And looking at the still-declining trends in global growth indicators and PMI numbers of our major trading partners, there remains downside risks to Singapore’s trade sector,” it said.

“With the MAS [Monetary Authority of Singapore] surprising consensus last week by keeping to its current “modest and gradual appreciation” stance, exporters may face even more global price competition in the upcoming months as the SGD [Singapore dollar] goes on the continued appreciation path against the currencies of our trading partners,” it added.


By: Nurluqman Suratman



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