Singapore exports fall by 5.9% in February, as US tariffs cloud outlook for rest of the year



Source: TODAY

Singapore’s non-oil domestic exports (Nodx) shrank at the fastest pace in almost 1.5 years in February, contracting 5.9 per cent from a year ago, with declines seen in both electronics and non-electronics segments.

It was also the first contraction since last August, and the performance went against the expectations of economists, who projected a 4.4 per cent expansion in a Reuters’ poll.

Nevertheless, economists whom TODAY spoke to played down concerns, noting the Chinese New Year effect.

However, the fall in output of non-electronic products such as pharmaceuticals, non-monetary gold and petrochemicals was a surprise, said the economists, adding that the electronics segment also performed weaker than expected.

DBS senior economist Irvin Seah said: “Due to the alternative month (between Jan and Feb) nature of the festive season, it often creates significant base effect on the Nodx. This is particularly exacerbated by the fact that plants in China – a big market for Singapore manufacturers – will typically ramp up their production ahead of Chinese New Year before shutting down their production entirely during the festive period.”

The economists pointed out that on average, Nodx expanded about 3.5 per cent in January and February, compared to the same two months last year — which was a “decent expansion”.

Nodx last month reversed from the 12.9 per cent expansion in January, data from trade agency International Enterprise (IE) Singapore showed on Friday (Mar 16). Shipments for electronics shrank by 12.3 per cent last month, following the 3.9 per cent decline in January. Integrated circuits, personal computer parts and diodes & transistors declined by 11.4 per cent, 48.1 per cent and 25.6 per cent respectively, contributing the most to the decrease.

Non-electronic exports fell by 3.4 per cent in February, reversing from the 20.7 per cent expansion a month earlier.

Exports to China — a top destination for the Republic’s exports — last month contracted by 23.6 per cent, compared to the previous month’s growth of 3.3 per cent. The contraction was led by sharp declines in non-monetary gold, integrated circuits and specialised machinery which fell by 56.3 per cent, 25.8 per cent, 27.8 per cent, respectively.

UOB economist Francis Tan said: “As shipments for pharmaceuticals are volatile, it was difficult for the economists to price the factor in, hence leading to a mismatch in expectations for last month.”

Even so, Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said in a research note that “the strong electronics upswing seen last year is starting to wane and the momentum has probably peaked”, pointing to the moderation of the manufacturing purchasing managers’ index (PMI).

Earlier this month, data released by the Singapore Institute of Purchasing and Materials Management showed that the PMI came in at 52.7 points in February, a dip of 0.4 points from January. The January reading was an eight-year high, and moderation was largely due to a pullback in new orders and output, particularly in the electronics segment.

Mr Chua and Ms Lee, however, said it was too early to call an end to the electronics upswing. February’s industrial production figures due to be released on March 26 will help provide a “fuller picture”, they said.

Overall, the economists said exports this year could slow due to global economic conditions. A major downside risk going forward is the United State’s increasingly protectionist trade stance, which would impact the trade outlook.

“The expected imposition of further trade tariffs on China after the steel and aluminium imports tariffs in March could lead to a spiralling trade war, negatively impacting global trade and inevitably, Singapore’s exports,” UOB senior economist Alvin Liew said.

Source: TODAY