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Singapore’s exports dip 4.6% on-year in June

The dip was largely due to a slump in electronic exports, which outweighed a rise in non-electronic shipments, trade agency IE Singapore says.

SINGAPORE: Non-oil domestic exports (NODX) in Singapore contracted 4.6 per cent on-year in June, dragged down by electronic exports which outweighed a rise in non-electronic shipments.

The fall in NODX comes after a 6.6 per cent on-year decrease in the previous month, according to statistics released on Thursday (July 17) by International Enterprise (IE) Singapore.

On a month-on-month seasonally adjusted basis, NODX rose by 1.5 per cent to S$13.5 billion in June, compared with the previous month’s 7.5 per cent decline.

Electronic exports fell 17.4 per cent compared with June last year, after declining 15.3 per cent in the previous month. The decrease was largely due to shrinking sales of integrated circuits (IC) (-17.3 per cent), (-32.2 per cent) and parts of PCs (-18.5 per cent), the trade agency said.

Non-electronic exports in June rose 1.3 per cent from the previous year, following a 2.4 per cent slump in May. The rise was led by pharmaceuticals (+24.3 per cent), petrochemicals (+29 per cent) and printed matter (+32.6 per cent).

On a year-on-year basis, NODX to all of the top 10 markets – except Malaysia, Indonesia, China and Taiwan – fell in June. The top three contributors to the decline were Hong Kong, South Korea and the European Union.

Non-oil re-exports (NORX) expanded by 7.5 per cent in June, in contrast to the 4.7 per cent contraction in the previous month, due to a growth in both electronic and non-electronic re-exports.

Electronic re-exports increased by 6.4 per cent in June, following the 1.9 per cent rise in the previous month. The expansion was due to ICs (+10.9 per cent), diodes and transistors (+26.8 per cent), and disk media products (+27.9 per cent).

Non-electronic re-exports increased by 8.7 per cent in June 2014, in contrast to the 10.9 per cent decline in the previous month. The expansion in non-electronic re-exports was due to a spike in precious stones and pearls (+249.6 per cent), non-electric engines and motors (+39.4 per cent), and electrical medical apparatus (+186.6 per cent).

- Structural decline? -

Economists say the continued weakness of electronics exports signals a structural decline in competitiveness of some key segments in the industry.

Global PC shipments contracted in 2013, and IHS forecasts that it will be about flat in 2014. In contrast, it estimates that global shipments of tablets will increase by 72 per cent in 2014 to reach 243 million units, rising to 488 million units by 2017.

“In the last two years, global PC shipments have been declining and Singapore's heavily leveraged to that segment of the electronics sector, whereas what's really growing is demand for tablets and smartphones, and that's where northeast Asian producers have a strong advantage,” said Rajiv Biswas, senior director and Asia Pacific chief economist at HIS.

“A lot of production related to smartphones and tablets is in countries like South Korea, Taiwan, China, Japan, so that's why this shift in global consumer demand towards smartphones and tablets has put Singapore in a relatively weaker position.

“We do expect some stabilisation this year in the demand for global PC shipments, so that will help to stabilise the outlook in the second half of the year for Singapore's electronics industry… but when we look at the medium term outlook, PCs aren't going to be a big growth outlook."

IT research firm, Gartner, recently reported that after two years of decline, worldwide PC shipments experienced flat growth of 0.1 per cent in the second quarter of 2014 compared to the same quarter last year.

- US, eurozone recovery paint brighter future -

The electronics sector was the main drag on Singapore's key exports, which continued on its downward slide in June.

But looking ahead, economists expect the picture to improve, citing stronger overall export demand as recovery gains momentum in the United States and eurozone.

"If we take a look at first half of this year versus first half of last year, both NODX and total exports are looking better,” said Edward Lee, regional head of research (Southeast Asia) at Standard Chartered Bank’s Global Research.

“But unfortunately on the NODX side, due to firms shifting operations offshore, we may continue to see NODX being affected. But if you take a look at our exports to major economies, again on a first half of the year basis, to US, to EU, to China, all look better compared to first half of last year."

However, the weaker-than-expected trade data for June is likely to pull down GDP performance for the second quarter, even further than previously estimated.

According to advanced estimates, Singapore's economy shrank 0.8 per cent in the second quarter of this year, on a quarter-on-quarter seasonally-adjusted and annualised basis.

"What we've seen in the advanced estimate for Q2 is that GDP contracted quarter-on-quarter. That was based mainly on data for April and May,” said Mr Biswas.

“Now that we've seen June export data, and quite negative numbers for electronics exports continuing, I think the likelihood is that it'll drag down the Q2 GDP numbers even further, so that will tend to bring the overall growth rate for 2014 probably somewhat below 3.5 per cent.” 

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