SINGAPORE: As shipments of locally made goods continue to crumble, IE Singapore slashed the Republic’s exports forecast to reflect an expected contraction of between 5 and 5.5 per cent this year, versus its previous forecast of -3 to -4 per cent.
External demand has remained stubbornly weak, with China, the euro zone and the United States — Singapore’s top three trading partners — importing less from the Republic. Amid fresh uncertainty around global trade sparked by US President-elect Donald Trump’s protectionist policy stance, further risks are in store for Singapore, said analysts.
On a year-on-year basis, non-oil domestic exports (Nodx) shrank by 5.4 per cent in the third quarter, following the previous quarter’s 0.2 per cent decline, as shipments of both electronic and non-electronic products fell. This takes Nodx’s performance for the first nine months to -4.9 per cent. In terms of geography, exports to eight of Singapore’s top 10 markets fell in the third quarter, except for Hong Kong and South Korea.
The biggest contributors to the year-on-year decrease in the quarter were China, Indonesia and the US. Specifically, Nodx to China declined by 8.2 per cent, following the previous quarter’s drop of 9.1 per cent.
Exports to Indonesia fell by 15.9 per cent, after the second quarter’s -16.3 per cent. And shipments to the US decreased by 7.7 per cent, in contrast to the 2.4 per cent rise in the previous quarter.
ANZ economist Ng Weiwen said: “Capital expenditure in advanced economies turned out to be more subdued than anticipated … Exports are clearly not out of the woods for Singapore because the US and China are already importing less from the world due to insourcing as they embrace vertical integration domestically … Meanwhile, free trade has scarce political support in this age of populism post-Brexit and ahead of the European elections next year, in addition to potentially restrictive trade policies under the Trump administration.”
Going forward, as the global economy picks up “slightly” and oil prices improve next year, Nodx is likely to fare better, said IE Singapore. It has forecast exports growth to come in at between -1 and 1 per cent next year.
But Permanent Secretary (Trade and Industry) Loh Khum Yean warned: “Political risks and uncertainties have risen, and could in turn lead to greater economic uncertainties. In particular, an increasing backlash against globalisation could further dampen global trade, which is already weak.”
