Singapore non-oil exports dip more than forecast

Rigs under construction at Jurong Shipyard.
PHOTO: The Straits Times

Singapore's exports have been suffering for some time now amid weak global demand, but the latest data still managed to startle economists who had already braced themselves for bad news.

Non-oil domestic exports slipped 7.2 per cent last December over the same month in 2014, dragged down by falling shipments to China, South Korea and Taiwan.

The poor showing - much weaker than the 4.4 per cent decline forecast by economists - likely heralds more turbulence ahead.

"Plainly, today's set of numbers is another reminder about the harsh environment out there," said DBS economist Irvin Seah.

Shipments of non-electronic products, including petrochemicals and civil engineering equipment parts, shrank 10.3 per cent last December compared with the same month in 2014, and were the main drag on overall exports.

Meanwhile, electronics shipments dipped 0.3 per cent.

Non-oil domestic exports to Singapore's top 10 markets - except the United States, Japan and Hong Kong - fell last month, as regional demand remained weak.

Economists do not expect a strong trade rebound this yearas sentiment remains muted around the world.

OCBC economist Selena Ling said non-oil domestic exports might improve slightly from last year's 0.1 per cent contraction to come in between zero and 1 per cent this year. However, "the China slowdown, coupled with the oil price slump weighing on regional economies like Malaysia, may continue to be a drag on the regional trade outlook", she said.

Mr Seah said last month's lacklustre trade data could prompt a downward revision in economic growth estimates for the last three months of last year.

"More importantly, such dire economic conditions will likely persist for the coming months judging from the outlook of the global economy. Brace yourself for a very cold winter," he said.

In the longer term, Singapore must position its economy to leverage its growing global services trade, said ANZ economists Ng Weiwen and Glenn Maguire.

This is especially since China - Singapore's largest trading partner - is rebalancing its economy towards more consumption and service-led growth.

Chinese companies are also increasingly sourcing from within the country instead of importing from the region, which could further weigh on regional trade in the long term, they added.

This article was first published on January 19, 2016.
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