Singapore exports continue to decline as China slowdown bites

The drop in exports was lower than a median forecast of a 6.0 percent slump forecast in a Reuters poll.

Singapore exports to China weakest in seven year; dives 25% in January
A view of PSA's Tanjong Pagar container terminal in Singapore January 4, 2016 Reuters

Singapore's exports skidded in September despite a rebound in shipments to Europe, as a lull in demand from China continued unabated.

Non-oil domestic exports dropped 4.8 percent in September compared with a year earlier, according to trade agency International Enterprise Singapore.

However, the drop in exports was lower than a median forecast of a 6.0 percent slump forecast in a Reuters poll. The shipments to China also saw a slower drop than in the previous month. Exports to the top trading partner fell 2.2 percent from a year earlier, compared with a 5.4 percent slump in August.

On a month-on-month, seasonally adjusted basis, shipments rose 2.4 percent in the last month, the data showed.

While electronic shipments fell 6.6 percent, non-electronic exports contracted 4. Shipments to Europe, Hong Kong and South Korea saw an uptick, but sales to Malaysia, Indonesia and the US led the decline.

"We expect Singapore NODX to stabilize in the coming months on a year-on-year basis. But the recovery is expected to be modest given still weak external demand," Trinh Nguyen, senior economist for Natixis in Hong Kong, told Reuters.

"Given the spillover of the trade sector into services lately, the MAS does not want to cause significant depreciation expectations of the Singapore dollar, which will cause domestic interest rates to rise too fast," Nguyen said, referring to the Monetary Authority of Singapore.

On Friday, the Ministry of Trade and Industry said Singapore's gross domestic product contracted 4.1 percent on a quarter-on-quarter basis, compared with 0.2 percent growth in the previous quarter.

Pressured by global downturn

The economy grew 0.6 percent year-on-year in the third quarter, data showed, which was shockingly slower than the 2 percent growth in the second quarter. A median growth forecast of 1.7 percent had been predicted by economists.

Singapore's export-led economy had been pressured by the global downturn for more than a year, with the city state' dominant oil and gas sector suffering long-term setback due to the continued slump in oil prices.

The persisting export slump was evident from the annualised 17.4 percent drop in manufacturing during the latest quarter.

Last week, Singapore's Trade and Industry Minister Lim Hng Kiang conceded the economy is experiencing "some quarters of negative growth" but ruled out the possibility of the country slipping into an outright recession.