Weaker Chinese growth in Q1 hits S'pore exporters

Local exporters felt the pinch from weaker Chinese growth in the first quarter but the outlook for the rest of the year remains relatively upbeat, say experts.

Standard Chartered Bank economist Jeff Ng said China's faltering performance in the three months to March 31 did not reflect the country's economic fundamentals.

"We attribute the weakness to subdued government spending and cautious consumer spending due to concerns about meat consumption," he said.

Consumer confidence has been rising and manufacturers are beginning to restock, hinting at greater economic activity in the coming months.

"We expect the recent acceleration in investment and export growth to boost China's GDP (gross domestic product) growth in the next few quarters and provide stronger demand for Singapore exports by the end of the year," he added.

China's economic recovery unexpectedly took a turn for the worse in the first quarter, expanding 7.7 per cent compared with the same period last year. This was down from the 7.9 per cent growth in the fourth quarter last year and below market expectations of an 8 per cent expansion.

OCBC economist Selena Ling said the global economic recovery is likely to continue, "albeit at a slower pace than initially thought by most market players at the start of this year".

"While the still-choppy global economy and increasing risks to Chinese growth could be a risk that would continue to weigh on trade volume, our view on Singapore's export growth potential for the rest of the year remains practically unchanged," she said.

Mr Leif Eskesen, HSBC's chief economist for India and ASEAN, said China's GDP growth is expected to reach 8.5 per cent in the final quarter of the year and 8.2 per cent for the whole of 2013.

"An improvement in the global trade cycle later in the year is also likely to provide some tailwinds," he said.

Ms Joyce Seow, group business development director of plastics manufacturer Watson EP, said that while the company has seen "a little bit of a slowdown" for the Chinese market, this is minor compared with the drop in sales for the European and United States markets.

The company, which has a Chinese manufacturing facility in Dongguan, has seen first-quarter earnings from the China market fall by about 3 per cent to 5 per cent over the same period last year.

"We are already seeing an improvement for the next quarter, as orders have risen, and we expect the Chinese market to recover over the course of the year," said Ms Seow.

chiaym@sph.com.sg

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