Tumble in Singapore July exports keeps economy underpowered

SINGAPORE, Aug 17 — Singapore’s exports in July tumbled more than expected as sales to China and the United States declined, leaving the trade-reliant economy struggling to restore momentum and keeping pressure on the central bank to deliver further stimulus.

Non-oil domestic exports (NODX) fell 10.6 per cent last month from a year earlier, the trade agency International Enterprise Singapore said in a statement today. That was far worse than the median forecast of a 2.5 per cent slump in a Reuters poll and a revised 2.4 per cent loss in June.

On a month-on-month, seasonally adjusted basis, exports declined 1.8 per cent in July, missing a forecast of a 0.2 per cent rise in the survey.

The weak trade numbers will put the focus back on the Monetary Authority of Singapore after its surprise easing in April when it set the rate of appreciation of the Singapore dollar’s policy band at zero per cent.

Some analysts see prospects of further easing at its October meeting to restore momentum, but MAS deputy managing director Jacqueline Loh last week said the current monetary policy stance remains appropriate for 2016 even as the government cut its economic growth forecast.

“External conditions still look very tepid in terms of demand,” said Edward Lee, head of Asean Economic Research at Standard Chartered Bank. Lee however believes the hurdle for another easing by MAS soon after April remains high for now.

The economy is now expected to expand 1-2 per cent this year, lower than the previous government forecast of 1-3 per cent on concerns over Britain’s vote to leave the European Union and weakening global demand.

IE Singapore last week said the NODX is expected to shrink 3 to 4 per cent this year.

Exports to China, Singapore’s top overseas market, fell 16.6 per cent in July from a year earlier, much more than a 9.9 per cent decline in June.

That came against the backdrop of a slowdown in China, with activity in July showing an underpowered economy.

Shipments to the United States slumped 19.1 per cent last month from a year earlier, compared to a 5.9 per cent increase in June.

Sales to the European Union gained 3.0 per cent in July on-year after a 5.8 per cent contraction in June.

Electronics exports in July shrank 12.9 per cent from a year earlier.

The weak trade numbers mirror depressed activity at Singapore’s factories, which hit a five-month low in July, contracting for a 13th consecutive month on falling new orders and exports, a survey showed earlier this month. — Reuters