SINGAPORE: Singapore's non-oil domestic exports (NODX) recorded their worst decline in more than two years in December, with shipments to most of its top markets declining.
Exports fell 8.5 per cent year-on-year in December, deepening from a revised 2.8 per cent decline in November, as shipments of electronics and pharmaceuticals plunged, data from trade agency Enterprise Singapore showed on Thursday (Jan 17).
The outcome was well below a 1.5 per cent increase predicted by economists in a Reuters poll and the worst performance since October 2016, when exports declined 14 per cent year-on-year.
"This could show that US-China trade talks have become a ruse, falling in line with disappointing China trade data," Ms Selena Ling, head of treasury research and strategy at OCBC, told Reuters. "There is a likelihood that (export fall) will continue into the first quarter."
Earlier this week, China announced that its December exports unexpectedly fell 4.4 per cent from a year earlier, the biggest monthly drop in two years, pointing to further weakening in the world's second-largest economy.
On a seasonally adjusted month-on-month basis, Singapore's exports contracted by 5.7 per cent in December, following the previous month's revised 4.3 per cent decline.
Electronic exports slumped by 11.2 per cent year-on-year, after a brief recovery in November when it rose 4.3 per cent.
PCs, disk media products and diodes & transistors contracted by 20.5 per cent, 28.5 per cent and 34.4 per cent respectively, contributing the most to the decline in electronic NODX.
Non-electronic exports declined by 7.4 per cent year-on-year in December, slowing further from a 5.4 per cent decline the previous month.
Specialised machinery (-32.5 per cent), pharmaceuticals (-26.8 per cent) and primary chemicals (-28 per cent) contributed the most to this decline.
Overall, exports to eight out of Singapore's top 10 markets declined in December, except to the United States and China. The largest contributors to the NODX decrease were the EU (-28.7 per cent), South Korea (-39.1 per cent) and Malaysia (-15.5 per cent).
"This suggested a deterioration in global and regional growth prospects and was likely exacerbated by the fading of some of the pre-emptive frontloading activities within the region in 3Q18 in anticipation of the US-China tit-for-tat tariffs," said Ms Ling in a report to Channel NewsAsia.
"While Singapore’s NODX to the US market may have benefited in recent months, nevertheless at this juncture it is unclear if the December rebound in NODX to China is sustainable at 15.4 per cent year-on-year, pending the outcome of the US-China trade talks given the 90-day ceasefire will end in Mar 19," she said.
Earlier this month, Singapore announced that its economy grew more slowly than forecast in the fourth quarter after the manufacturing sector shrank, adding to jitters that the Sino-US trade dispute will drag on growth in 2019.
ING said in a report it was difficult to pin the export decline on any single geopolitical factor such as the trade war as exports to both China and the United States had held up. But shipments across Asia were noticeably in the red and the trade data almost certainly means a downward revision to GDP, it said.
Going into 2019, Singapore's external environment is likely to slow further from the previous year, said UOB economist Barnabas Gan.
"Into 2019, Singapore’s external environment will likely slow further from the previous year, albeit positive at our forecast for full-year NODX growth at 1 per cent," Mr Gan said in a report sent to Channel NewsAsia.
"To that end, Singapore remains to be an export-oriented economy. Thus accounting for the ongoing US-Sino trade tensions and US-centric economic risks surrounding its government shutdown, there remains to be downside risks to our trade outlook into the year ahead. Elsewhere, we would also need to contend with the high-base growth levels seen in 2018," he added.