Singapore’s May exports surge past expectations but trade tensions cloud outlook

A global exports boom benefited Singapore and other trade-dependent Asian economies last year. — Reuters pic
A global exports boom benefited Singapore and other trade-dependent Asian economies last year. — Reuters pic

SINGAPORE, June 18 — Singapore’s exports grew at their fastest pace in seven months in May, boosted by an extended surge in pharmaceutical shipments, though a heated Sino-US trade dispute is clouding the outlook for the trade-dependent city state.

Non-oil domestic exports (NODX) rose 15.5 per cent year-on-year last month, data from trade agency International Enterprise Singapore showed today, accelerating from the 11.8 per cent jump in April and blowing past the 4.7 per cent increase predicted by economists in a Reuters poll.

“This bodes well for the second quarter (exports) given that the first quarter was quite disappointing,” said Selena Ling, OCBC Bank’s head of treasury research and strategy.

However, the recent sharp export growth has been supported by the volatile pharmaceuticals sector, and analysts including Ling don’t expect the uptick to be sustained.

“The pharma sector typically has these cycles which are quite volatile and may last only for the next couple of months.”

In May, exports of pharmaceuticals rose 32.1 per cent on-year, slowing slightly from a 43.7 per cent rise in April.

The electronics sector, the lynch-pin of Singapore’s better-than-expected economic growth last year, saw its sixth consecutive month of decline in May, contracting at 7.8 per cent.

A global exports boom benefited Singapore and other trade-dependent Asian economies last year, particularly for makers of electronics products and components such as semiconductors, though analysts say the sector’s growth is past is peak.

On a seasonally adjusted month-on-month basis, exports expanded 10.3 per cent in May after growing 6.5 per cent in April, and compared to poll forecast of a 1.0 per cent expansion.

Singapore in April tightened its monetary policy for the first time in six years and upgraded its first quarter GDP last month.

There are concerns the simmering trade tensions between the United States and China, Singapore’s biggest export market, could drag on shipments and overall economic growth in the city state.

US President Donald Trump said he was pushing ahead with hefty tariffs on US$50 billion (RM199.9 billion) of Chinese imports on Friday, and the smoldering trade war between the world’s two largest economies showed signs of igniting as Beijing immediately vowed to respond in kind.

“The picture now is probably more clouded by this ongoing tit-for-tat tariffs between China and the US,” said Ling. — Reuters

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