SINGAPORE: Singapore’s exports rose for the third consecutive month in June, although the pace of growth slumped due to the slower growth of pharmaceutical shipments, official data showed on Tuesday (Jul 17).
Non-oil domestic exports (NODX) grew just 1.1 per cent last month, slowing significantly from a 15.5 per cent expansion in May and 11.8 per cent in April, according to figures released by the trade agency Enterprise Singapore.
This was less than the 7.6 per cent rise predicted in a Reuters poll of analysts.
On a seasonally adjusted month-on-month basis, exports fell 10.8 per cent in June after growing 10.3 per cent the month before. The poll tipped a contraction of 8 per cent.
Pharmaceutical exports grew 19.1 per cent in June from the year earlier, slowing from 32.1 per cent growth in May.
Shipments of electronics fell by 7.9 per cent, after declining 7.8 per cent in May. The growth of non-electronic exports slowed to 4.6 per cent in June, following a 26.2 per cent expansion in the previous month.
Overall, shipments to four of Singapore’s top 10 markets grew, with growth led by the US and Indonesia. Shipments to China, Singapore’s biggest export market, fell by 15.8 per cent after declining 6 per cent in May.
OCBC Bank’s head of treasury research and strategy Selena Ling described that as “lopsided effects” from the brewing trade tensions between the US and China thus far.
“NODX rose to only 4 of our top 10 NODX markets in June, with the largest declines seen in South Korea and China, which could be partly due to the rising trade war concerns,” she wrote in a note.
Citing how growth for NODX in the first half came in at 5.4 per cent year-on-year, down from 9.1 per cent over the same period a year ago, Ms Ling expects the growth momentum for exports to further decelerate into the third quarter.
This will mean “some downside risk” to the full-year NODX growth forecast, “assuming potential further disruptions to regional supply chains if the next leg of US$200 billion of US tariffs on Chinese imports materialises in September”, she added.
Echoing that, DBS economist Irvin Seah said the marginal rise in NODX for June is in line with expectations “of a drop back to reality”.
In addition, the big decline in the seasonally adjusted month-on-month figure is the “bigger worry”, which suggests that the “underlying trend is heading downwards”.
Noting how the modest rise in NODX was driven largely by ad hoc items, such as “civil engineering equipment” and the ever-volatile pharmaceutical products, Mr Seah said "sustainability was always in question" with risk on the downside.
“Moreover, the PMIs (purchasing managers’ index) over key markets have been easing and leading indicators for electronics were also pointing to a softer patch in global electronics demand,” he added.
INCREASINGLY CLOUDY ECONOMIC OUTLOOK
Given the slowdown in the external environment, Mr Seah is expecting “an even slower GDP growth” for the Singapore economy in the third quarter.
"Although the economy had held up well in the second quarter, the impact from the slowdown on the external front will only manifest in the third quarter figures," he said.
Coupled with the effects of trade protectionism and tighter liquidity conditions, Singapore's economic outlook in the longer horizon is "turning increasingly cloudy", Mr Seah added.
While holding on to their full-year GDP forecast of 3.5 per cent, Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye also warned of “emerging downside risks” in the second half of the year.
These include the recent property cooling measures, which appear “ill-timed and overly harsh, coming on the back of a visible growth slowdown and an escalating US-China trade war”, Dr Chua and Ms Lee said.
“Property transactions actually fell 42 per cent in June from May, with few signs that foreign purchasers are back in any significant way. Mortgage growth is moreover still slow,” they said, while adding that these suggest existing measures like the total debt servicing ratio (TDSR) rules are already keeping household debt in check.