- POSTED: 17 Sep 2013 18:36
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From January to August, Singapore's non-oil domestic exports (NODX) fell 7.7 per cent on-year, and some economists say it could miss its official forecast of a 0 to 1 per cent growth this year. Singapore's economy may even see a contraction in the third quarter.
SINGAPORE: Singapore's non-oil domestic exports (NODX) contracted unexpectedly in August, falling 6.2 per cent on-year following a 1.9 per cent drop in July.
August's fall is the seventh straight month of decline, according to figures from trade agency International Enterprise Singapore (IE Singapore).
The pullback in trade performance surprised some economists who had expected a 2.4 per cent on-year increase in August NODX.
Compared to July, NODX declined by 6.0 per cent in August, following the previous month's 1.8 per cent contraction.
From January to August, NODX fell 7.7 per cent on-year, and some economists say Singapore could miss its official forecast of a 0 to 1 per cent growth this year.
Singapore's economy may even see a contraction in the third quarter, following a strong 15.5 per cent quarter-on-quarter growth in the second quarter.
DBS Bank senior economist, Irvin Seah, said: "If we do get a contraction in August industrial production number, I think it is almost a given that we will get a contraction in GDP growth for the third quarter.
"Over the last one month or so, we have seen problems emerging in two of our key neighbouring trading partners, essentially Malaysia and Indonesia.
"These two countries account for quite a big chunk of our exports. With the problems in these two countries, the depreciation of their currencies, it will certainly affect our non-oil domestic exports performance and indirectly our GDP growth."
IE Singapore said exports to all of the 10 major markets, except China and Hong Kong, decreased in August.
The top three contributors to the export contraction were the European Union, South Korea and Taiwan.
Shipments of both electronics and non-electronics products were all lower in August.
Exports of electronics goods fell 9.2 per cent on-year in August, after posting an 11.1 per cent drop in the previous month.
The more volatile segments like pharmaceuticals and structures of ships and boats also saw sharp declines in August.
Year-on-year, pharmaceuticals exports slipped 31.1 per cent, structures of ships & boats plunged 95.8 per cent and aromatic chemicals NODX fell 54.4 per cent during the month.
But non-oil re-exports rose 14.4 per cent on-year last month.
UOB economist Francis Tan said: "Non-oil re-export has been rising on a year to date basis, 6.9 per cent compared to the same period a year ago. That goes to show that even though domestic exports have been weak for the first few months of this year, Singapore's status as a transhipment hub, as a logistics hub, as a trading hub, is still in place because a lot of re-export is going through Singapore, and that also goes to show that in Asia, in terms of trade volume, things are actually on the rise."
Some economists say that the poor trade performance in August suggests that global growth outlook may not be as rosy as expected, and perhaps market expectation has gone ahead of fundamentals.
Apart from uncertainties in the emerging markets, some economists say growth in the US and Europe is also far from being firm, with unemployment still high in the developed economies.
The government expects the Singapore economy to grow by between 2.5 and 3.5 per cent this year.