SINGAPORE (Nikkei Markets) - Singapore's key exports fell for a third straight month in May, cementing expectations of further weakening as the ongoing trade war between the U.S. and China disrupts global supply chains.
While trade agency Enterprise Singapore cited the high base of last year as a reason for the 15.9% plunge in shipments last month, economists singled out the continuing decline in electronics exports and the slowing demand from China.
"With the broadening of the U.S.-China trade war to a tech war, Singapore may face increasing pressure and collateral damage given the widening reach of U.S. export controls on emerging and foundational technologies," said Maybank Kim Eng economist Chua Hak Bin.
Electronics exports plunged 31.4% in May for the sixth consecutive month, worsening from the 16.3% contraction in April. According to Chua, it is the steepest fall since January 2009.
Enterprise Singapore said the largest declines were seen in areas such as semiconductors and disk media.
Shipments of integrated circuits fell by 39.8% on-year, while exports of integrated circuit parts dropped by an even larger 54.2%.
Exports of disk media products plunged 42.4%, worsening from April's on-year decline of 31.3%.
"Many of the multinational companies that are abiding by the U.S. export controls - Intel, Micron, Broadcom and Panasonic - have a presence in Singapore," Chua said.
According to Howie Lee, an economist with Oversea-Chinese Banking Corp, the multiple trade barriers by the U.S. are likely to crimp global disposable income and dampen demand for smartphones and personal computers, pushing the cyclical electronics industry into an even deeper downturn.
Several economists have warned that Singapore could sink into a recession if the current dispute between China and the U.S. develops into a full-blown trade war, given the economy's huge dependence on global trade.
Overall, the decline in exports in May was the steepest in over two years although it was slightly better than the consensus estimate.
In terms of key markets, demand weakened the most in economies such as China, Japan, Taiwan and Hong Kong with exports to these destinations declining between 23.3% and 34.7%. Shipments to the U.S. continued to buck the downward trend, rising by 0.2% on-year following April's gain of 2.2%.
Enterprise Singapore said domestic exports of non-electronic goods fell 10.8% year on year, led by sharp declines in overseas shipments of civil engineering equipment parts, non-monetary gold and petrochemicals.
On a month-on-month seasonally adjusted basis, non-oil domestic exports rose 6.2% in May to S$14.1 billion ($10.3 billion), reversing from the previous month's contraction of 0.7%.
Singapore reports non-oil domestic exports as prices of refined oil products tend to be volatile while total exports include goods worth billions of dollars that are produced elsewhere but shipped through the city-state's container ports.