Exports dip fuels concerns

This article is more than 12 months old

Rise in electronics shipments not enough to lift May exports

Singapore's electronics shipments continued to soar last month on strong global demand, but it was not enough to arrest a slide in overall exports.

Non-oil domestic exports slid 1.2 per cent, according to trade agency IE Singapore yesterday.

It was the second straight month of contraction after five months of growth.

Economists had, in fact, expected a much steeper 5.6 per cent dip last month because of a high base in the same month a year earlier.

However, though the data came in better than expected, it still fuels concern that a global export rally that lifted demand for Singapore's shipments might be tapering off.

It is also reinforcing worries that the pick-up in growth has thus far been limited to certain segments of the economy - in particular, electronics manufacturing.

May's export slide came as non-electronics shipments shrank 9 per cent year on year.

This outweighed a 23.3 per cent rise in electronics exports, the seventh consecutive month of expansion.

The latest trade data "paints a bullish picture" despite the negative overall number, said Maybank Kim Eng economist Chua Hak Bin, who noted that strong electronics shipments indicate the tech upswing "appears to be strengthening".

United Overseas Bank economist Francis Tan is also optimistic that global trade is picking up, saying: "Non-oil domestic export growth rates are notoriously volatile... (this dip) should not veer us off course in our longer-term view of the recovery in global trade for this year."

In addition, non-oil re-exports - a proxy for wholesale trade services - surged by 14.3 per cent last month from a year earlier.

It suggests that trade-related services are also getting a lift from the broader rebound in regional trade activity, said Citibank economist Kit Wei Zheng.


But others are more cautious about the outlook and reiterate worries that the stronger economic activity has not been broad-based.

Said DBS Bank senior economist Irvin Seah: "While one can argue that the decline in the headline... figure is due to non-electronics exports' high base, we prefer to see it as another clear sign that the export rally is losing steam.

"This is consistent with our view that export demand may be peaking.

"Plainly, while the electronics cluster continues to be the bright spark, the fact that there are marginal spillovers to the rest of the economy remains a concern."

Even those who see global trade recovering warn that growth could ease in the second half of the year.

UOB's Mr Tan said: "This is especially since the current electronics cycle may be coming to an end with the rolling out of the next wave of smartphones likely in the second half of this year."

Yesterday's data showed that non-oil domestic exports to Singapore's top 10 markets - except for Hong Kong - rose last month. Growth was led by China, South Korea and the European Union.