Non-oil domestic exports fall short of market expectations
Electronic shipments contract for the seventh straight month
Weak global demand for electronics helped crimp exports here last month with only marginal gains racked up with hints that worse is to come.
The main culprit was easy to identify in yesterday's numbers with electronic shipments contracting for the seventh straight month. But the bigger picture takes in the threats of trade conflicts and slowing growth of China, which could hinder exports in coming months.
Non-oil domestic exports (Nodx) fell short of market expectations with a subdued 1.1 per cent growth last month over the same month last year, well shy of the 15.5 per cent surge in May.
A Bloomberg poll of economists had projected Nodx to increase by 7.8 per cent in June.
Non-electronic exports were the saving grace, growing 4.6 per cent year on year in June, but that was a sharp decline from May's blistering 26.2 per cent expansion.
Food preparations, pharmaceuticals and petrochemicals contributed most to the growth.
Electronic Nodx continued to disappoint, declining by 7.9 per cent, similar to the 7.8 per cent fall in May. The slump was led by integrated circuits, parts of PCs and consumer electronics.
DBS economist Irvin Seah said the strong overall export performance in recent months was driven by ad hoc items such as "civil engineering equipment" and the volatile pharmaceutical sector, so sustaining that momentum was always in question.
Economists warned that the decline of electronic exports shows no sign of letting up.
And given the high base effects in July and August, export growth in the sector is likely to remain lacklustre in the near-term, noted OCBC economist Selena Ling.
STELLAR
Last year's stellar economic growth was driven by electronics, but the pace was expected to slow this year as smartphone production cycles peaked.
Dr Tan Khay Boon, senior lecturer at SIM Global Education, said: "The strong demand in the electronics output is not sustainable, and efforts to diversify to non-electronics output has to continue to support export as an engine of growth."
Economists also pointed out that the "puzzling divergence" seen in robust electronic production but falling exports is unlikely to continue.
Shipments to most of Singapore's top 10 markets declined last month, except for exports to the United States, Indonesia, Hong Kong and the European Union.
Market watchers noted exports to China declined for the second straight month.
Mr Jameel Ahmad, global head of currency strategy and market research at FXTM, said: "It is a little too early to tell but it is possible that trade war concerns might have weighed on demand from China." - THE STRAITS TIMES
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