ASEAN KEY DESTINATIONS
Tumble in S’pore exports fuels easing expectations
SINGAPORE exports fell sharply in January as sales to major market China collapsed, adding to expectations monetary policy will need to ease further to take some of the sting off weak global demand and put the trade-reliant economy back on track.
Non-oil domestic exports (NODX) tumbled 9.9 per cent in January from a year earlier, trade agency International Enterprise Singapore said in a statement on Wednesday, missing the median forecast of a 7.4 percent contraction in a Reuters poll.
In December, annual exports fell 7.2 per cent.
Exports to China, Singapore’s top overseas market, declined sharply by 25.2 per cent in January from a year earlier, compared with a 18.7 per cent slide in December.
The slowdown in China, a major export market for commodities and consumer products, has dealt a severe blow to many economies across the world, including Asian exporting giants such as Japan and South Korea.
Analysts say the possibility of the central bank easing monetary policy at its scheduled review in April is rising, as the recent economic data indicated a worsening outlook for growth.
“I think we’ll continue to see further declines (in exports), largely down to the structural shift in the economy,” said Vaninder Singh, an economist at RBS.
“Our base case is for an easing in April to a neutral slope,” Singh said. The case for further central bank stimulus could increase if data next week such as January inflation and final fourth quarter growth numbers point to more slowing.
The Singapore dollar fell on the disappointing trade data, hitting 1.4084 per the US dollar, its weakest since Feb 9.
Shipments to the United States slumped 5.1 per cent last month, compared with December’s 12.8 per cent expansion.
Sales to Europe rose 14.3 per cent in January on-year after sliding 2.9 per cent in December.
“Any positive impetus from the merchandise trade channel will be marginal given the secular shift towards services in both the US and China which translates to lower merchandise imports from traditional partners,” said Weiwen Ng, economist at ANZ.
Annual domestic exports of electronics eased 0.6 per cent, while volatile overseas shipments of pharmaceuticals increased 6.9 per cent in January from a year earlier.
Singapore’s electronics sector has been underperforming neighbours such as South Korea and Taiwan due to cut-throat competition, as well as the city-state’s lack of popular high-tech products such as smartphones.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below