SINGAPORE: Singapore’s exports in November unexpectedly jumped, thanks to a sharp rise in shipments of pharmaceuticals as well as overall increases in sales to the European Union and China, but analysts say it’s too early to call a turn for the stressed trade sector.
Non-oil domestic exports (NODX) rose 11.5% last month from a year earlier, the trade agency International Enterprise Singapore said in a statement on Friday, blowing past the 3.0 drop predicted by economists in a Reuters survey While the data suggests the risk of the economy slipping into recession has diminished, the underlying picture is not very rosy, says Vishnu Varathan, senior economist for Mizuho Bank.
“The bigger picture is that I think exports remain quite subdued and correspondingly industrial production and in Singapore’s case, manufacturing, remains very weak,” he says.
The November exports got a boost from shipments of pharmaceuticals, which can swing sharply from month to month. Pharmaceuticals exports jumped 44.8% in November from a year earlier, after sliding 47% in October.
Support from a weaker Singapore dollar and a low-base comparison from a year earlier, also contributed to the strong exports, said Trinh Nguyen, senior economist at French investment bank Natixis SA in Hong Kong.
“The big question is whether this signals a turnaround for Singapore’s exports and we think that it is too early to rejoice,” Nguyen says. The Singapore dollar hit a seven-year low of 1.4481 per US dollar on Thursday and stood at 1.4431 yesterday.
That drop came after the US Federal Reserve raised interest rates and signaled a faster pace of rate increases in 2017, as policymakers prepared for to the incoming administration’s promises of tax cuts, fiscal spending and deregulation.
There is room for the Singapore dollar’s nominal effective exchange rate to move lower within the policy band set by the Monetary Authority of Singapore (MAS), Nguyen said.
