SINGAPORE: Singapore said on Monday (Feb 17) its non-oil domestic exports declined in January, as it cut its growth forecast for the year partly due to the COVID-19 outbreak.
Exports declined 3.3 per cent in January, after a 2.4 per cent expansion in December following nine months of contraction, according to official data.
Trade agency Enterprise Singapore revised downwards its growth projection for the rest of the year to -0.5 per cent to 1.5 per cent, down from an earlier forecast of zero per cent to 2 per cent growth.
The earlier forecast was "premised on a modest pickup in global growth, along with a recovery in the global electronics cycle", it said.
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However, the COVID-19 outbreak has affected Singapore's key trade partners, in particular China, which is Singapore's top export destination, the agency said.
"This may dampen the growth prospects of affected countries, if China’s growth comes in lower than earlier expected, with a knock-on impact on regional economies, through lower import demand, as well as supply chain disruptions and weakened consumer and business sentiments."
Lower oil prices are also expected to weigh on Singapore's oil trade and in turn, total trade.
"The Energy Information Administration projected weakened global demand in the first quarter of 2020, in part reflecting the effects of the COVID-19, compared to the previous update," Enterprise Singapore said.
JANUARY EXPORT DECLINE LED BY ELECTRONIC SHIPMENTS
The decline in January exports was mainly due to a 13 per cent decline in electronic exports, though it was at a slower pace compared with the 21.3 per cent contraction in December, said the trade agency.
Shipments of integrated circuits, personal computers and telecommunications equipment fell by 20.5 per cent, 32.2 per cent and 25.1 per cent respectively, contributing the most to the decline in electronic exports.
Non-electronic exports also fell slightly by 0.1 per cent, after an 11.5 per cent growth in the previous month. Petrochemicals (-23.2 per cent), pharmaceuticals (-5.5 per cent) and electrical machinery (-28.3 per cent) contributed the most to the decrease in non-electronic shipments.
Exports to the majority of Singapore's top markets decreased, except for US, China, South Korea and Taiwan, said Enterprise Singapore.
Shipments to Hong Kong fell by 40.9 per cent, leading the decline, followed by Indonesia with a 22.6 per cent contraction and the EU with a 10.5 per cent drop.
On a year-on-year basis, total trade declined by 3.1 per cent in January, after a 0.7 per cent growth in the previous month.
TOTAL TRADE FALLS BY 3.2% IN 2019
In 2019, Singapore’s total merchandise trade decreased by 3.2 per cent to S$1 trillion, compared with S$1.1 trillion in the previous year and S$967 billion in 2017.
The decline was mainly due to a 13.9 per cent fall in oil trade amid lower oil prices than a year ago, said Enterprise Singapore.
Non-oil domestic exports declined by 9.2 per cent last year, after a 4.2 per cent growth in 2018. This was due to lower shipments of both electronic and non-electronic products, said the agency.
Electronic shipments contracted by 22.5 per cent in 2019, following a 5.5 per cent decrease in the previous year. Non-electronic exports also declined by 4.5 per cent in 2019, after an 8.2 per cent growth in 2018.
Non-oil exports, which include both domestic exports and re-exports, declined year-on-year by 1.9 per cent in 2019, following a 6.5 per cent growth last year.
NODX RECOVERY MAY BE DELAYED: ECONOMIST
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said they now expect a manufacturing and export recovery to only happen in the second half of 2020, when the coronavirus outbreak is contained and governments begin to unwind quarantine and border controls.
Also noting that an export recovery may have been delayed again, OCBC Bank head of treasury research and strategy Selena Ling said: “The earlier stabilization in the NODX growth story was mainly predicated on a modest improvement in global growth and demand, which appears to have been thrown off-track by the sudden COVID-19 outbreak and its attendant effects on business and consumer confidence.”
This as the virus outbreak threatens to disrupt regional manufacturing supply chains and cause slower-than expected growth in Singapore’s key trading partners in the region, including China.
“Therefore, electronics and oil trade may again underperform in 2020,” she wrote in a note.
Separately on Monday, the Ministry of Trade and Industry downgraded its economic growth forecast range for 2020 to a range of between -0.5 and 1.5 per cent.
Growth this year is likely to come in at around 0.5 per cent, the mid-point of the forecast range, amid concerns about the ongoing COVID-19 outbreak, it said.