Exports in Singapore surprisingly rose in February from last year, mostly due to an uptrend in pharmaceutical cargo, a sector which is subject to volatility. However, overall trade appears to be, still, very bleak with a decline in demand from Asian nations.
Trade agency, International Enterprise Singapore said on Thursday that non-oil domestic exports were up by 2.1 per cent in February from the previous year.
An economist for Standard Chartered Bank, Jeff Ng stated that in spite of the unforeseen growth the digits are not that attractive in light of the lower export base in 2015:
“The result looks weak, given that the 3-month moving average continued to fall 5.6 percent year-on-year.”
He continued to say that the impacts of the base will be felt more in March and will challenge the year by year recordings.
Ng also stated that the depressed export market in Asian countries is also a concern:
“Given our own house view that growth in the U.S. and Europe may actually start to slow a bit, it does provide some challenges ahead.”
Similar to most of Asia, Singapore’s export industry has been struck by a sharp fall in demand from big trading associates, specifically China.
Data taken from Singapore’s main port operator showed that there had been a 9.7 per cent decline in the container statistics from the island’s ports within the first two months of the year in comparison to the same time period in 2015.
Singapore’s most popular overseas market, China, saw its exports to the country decline by 1.2 per cent in February along with a drop of 25.2 per cent in January.
China’s slow growth has affected many economies that include main Asian exporters, Japan and South Korea, particularly because China is one of the biggest export markets of commodities and consumer goods.
Vaninder Singh, an economist for RBS said that the present shift in the economy of Singapore heading towards value-added services and steering away from the manufacturing field indicates an unhealthy forecast for non-oil domestic exports:
“As the transformation continues to unfold, the NODX number will continue to remain under pressure.”
Electronics domestic exports were up by 0.7 per cent and pharmaceutical exports manufactured in different batches and quantities that can differ from each month, climbed by 40.0 percent in February as compared to the earlier year period.
Singapore is indicating a low performance in electronic sector as compared to its neighbours, South Korea and Taiwan, due to the city not having high technology based products such as smartphones.
Morgan Stanley said in the ASEAN outlook report this week:
“A structurally lower global GDP growth trend also exerts further downward pressure on an economy that has typically been a high-beta global proxy…The delay in export recovery suggests cyclical headwinds and that the economy is likely to decelerate further.”
The Government of Singapore will issue its budget on March 24, wherein it is extensively foreseen that a portion of government funds will be assigned for reviving the GDP by offering support to local companies to boost revenues.