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Nikkei Markets

Singapore exports continue double-digit fall for fifth month

July's better-than-expected decline hints at bottom

On a month-on-month seasonally adjusted basis, Singapore's non-oil domestic exports rose by 3.7% to 13.4 billion Singapore dollars.   © Reuters

SINGAPORE (Nikkei Markets) -- Singapore's key exports fell by double-digits for the fifth straight month in July although the pace of the decline moderated, raising the possibility that the worst may be over for the domestic economy.

But economists remained bearish, given the mounting problems faced by smaller export-reliant Asian economies amid the standoff between the U.S. and China.

Earlier this week, authorities in Singapore, whose total trade is more than three times the size of its gross domestic product, slashed the growth forecast for this year to between zero and 1% and said non-oil domestic exports were likely to fall by 8-9%, far worse than earlier expectations of a range from zero to a 2% contraction.

Latest figures from trade agency Enterprise Singapore emphasized the downtrend as shipments of electronics and other products such as pharmaceuticals and primary chemicals fell in July.

Overall, key exports declined by 11.2% in the month from a year ago.

However, the drop was smaller than June's decline of 17.4% as well as Refinitiv's consensus estimate for a 15% fall.

On a month-on-month seasonally adjusted basis, non-oil domestic exports rose by 3.7% to 13.4 billion Singapore dollars ($9.65 billion), partially reversing June's 7.8% decrease.

"Today's data don't really change our perception that Singapore's export-facing industries are still struggling, and we expect this to be reflected in ongoing production weakness in the months ahead," said Robert Carnell, ING's chief economist and head of research for Asia-Pacific.

But the worst of the declines may have passed, he said. According to Carnell, the recovery is more likely to be "L-shaped," with a long flat period, rather than a quick "V-shaped" rebound in the absence of catalysts that could spark a big pickup in demand.

Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp, said the economic headwinds facing Singapore and the rest of the world remain intact, given the continued tensions between the U.S. and China, the trade spat between Japan and South Korea, as well as the rising risk of a no-deal Brexit.

The persistent protests in Hong Kong was another factor, she added. The territory's government recently slashed the growth forecast for this year from 2-3% to 0-1%.

In Singapore, exports of electronics, a key growth engine, plunged again, by 24.2% in July, slowing from the previous month's 31.9% decrease. Exports of semiconductors dropped 24.2%, while overseas sales of personal computers declined by 35.5%.

Meanwhile, shipments of non-electronics decreased by 6.6%, easing from the 12.6% fall in June. Enterprise Singapore said the drop in non-electronics was led by pharmaceuticals, specialized machinery and primary chemicals, which all fell by more than 30%.

OCBC's Ling said that should Singapore's non-oil exports fall by 8-9% this year as expected, the drop would be the worst annual performance since the end of the global financial crisis in 2009.

--Kevin Lim

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