China's slowdown really hit home last month, with Singapore's shipments to the country taking the biggest hammering in seven years.
Non-oil domestic exports (Nodx) to China plunged 25.2 per cent last month over January last year, in the wake of falling demand and a shift towards domestic production on the mainland.
The dismal numbers on China were the low point of a bleak picture last month, with overall Nodx down 9.9 per cent year on year.
This was worse than the market forecast of a 7.6 per cent decline and a sharp fall from last December's 7.2 per cent contraction, according to data from trade agency International Enterprise Singapore yesterday.
Nodx to all of Singapore's top 10 markets except the European Union and Malaysia fell last month.
China led the decline, while shipments to Taiwan plunged 26.5 per cent and those to South Korea were down 14.8 per cent.
"The impact from the slowdown in China could be more broad- based than what many had expected," said DBS economist Irvin Seah, noting that China is the largest import partner for Singapore, South Korea and Taiwan.
"When China sneezes, the whole world catches a cold. But Singapore will probably catch it worse than others because of its small, open economy," he said.
As if to underscore the plight of the export sector yesterday, Changi Airport Group unveiled $14 million in cost relief for its cargo partners as "feeble world trade and a slowdown in China's economy" have dampened shipments.
Last month's weak exports raise the risk of the Singapore economy tipping into recession, economists said. Not only have exports to China slowed to a pace not seen since the last recession, but bleak data over the past few weeks is also already giving some economists a sense of deja vu.
"Manufacturing is contracting at a rate we last saw during the last financial crisis. Jobs growth is contracting at the same rate. Services were resilient last year, but now there are signs that services are starting to buckle," said Bank of America Merrill Lynch economist Chua Hak Bin, citing the recurring job cuts in the financial service sector.
Meanwhile, loan growth contracted 1.2 per cent last December, the weakest pace since March 2000, said Mr Seah.
Some economists are tipping that the Monetary Authority of Singapore (MAS) may let the Singapore dollar ease slightly at its April meeting as pressure mounts for the central bank to provide some cushion to the economy.
But Dr Chua expects the MAS to stand pat and wait for a clearer picture to emerge.
"Confirmation will come in July or August when the data is out. The MAS tends to be more reactive than pre-emptive, unless the data turns out very ugly in the coming months," he said.
Mr Seah said the MAS tends to be more accommodative only when the economy is already in recession. "We're inching closer and closer to the edge, but we haven't fallen off yet."
Firms have been feeling the crunch for months now.
"Since last year, the tempo has been slowing down. Overall, it is not something unexpected," said Singapore Manufacturing Federation president Douglas Foo.
But he was upbeat, calling this an "apt time" for bosses to do some business-model innovation and ready themselves for the upswing.
"This downturn is cyclical. Over the years, the economic cycles have become shorter, and the turnaround could be faster than we imagine," he said.
This article was first published on February 18, 2016.
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