Surprising 6.6% drop in non-oil exports

Surprising 6.6% drop in non-oil exports

Persistently weak electronics shipments and the volatile pharmaceuticals sector dragged down exports last month and renewed fears that Singapore has been slow to hitch on to the global economic recovery.

Non-oil domestic exports fell an unexpected 6.6 per cent in March over a year ago, after rising 8.9 per cent in February.

Exports declined 1 per cent in the year's first three months over the same period last year.

Electronics shipments entered their 20th consecutive month of decline in March, contracting 16.1 per cent, mainly due to lower demand for integrated circuits, computer parts and disk drives.

The traditionally volatile pharmaceuticals sector saw a 44.6 per cent decline in exports, while shipments of aromatic chemicals shrank 43.9 per cent.

Some economists cautioned that the latest numbers are a sign of Singapore's declining export competitiveness, amid restructuring challenges like rising business costs and the tight labour market.

Citi economist Kit Wei Zheng said the downward trend in electronics exports suggests worsening cost competitiveness and "indicates the toll that economic restructuring and possibly the strong Singapore dollar has taken on manufacturing demand thus far".

Others pointed to strong factory output and steadily rising re-exports as indicators that there may be more to last month's downbeat export data.

Barclays economist Leong Wai Ho said the weakness in electronics shipments last month "should not be interpreted as a loss of competitiveness".

He noted that more electronics exports have been classified under re-exports since last year.

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