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Nikkei Markets

Singapore exports surprise, rise for first time in nine months

Poor showing by electronics fails to dent optimism

SINGAPORE (Nikkei Markets) -- Exports out of Singapore recorded the first rise in nine months in December, defying forecasts and reinforcing expectations of a modest recovery after a volatile year dominated by the U.S.-China trade war.

Although shipments of electronics continued to plunge, economists said the rollout of 5G telecom networks and new technologies such as the internet of things would support fresh demand.

The December figures for the city-state echo the improvement in the performance of other Asian countries in recent weeks. China and Indonesia both recorded their first expansion in overseas shipments after a months-long decline.

In Singapore, exports of gold, pharmaceuticals and specialized machinery did especially well in December. The Southeast Asian country, whose trade is more than three times gross domestic product, said that in total, non-oil domestic exports rose 2.4% last month. Economists had expected the data to show a slight decline.

Shipments to most major export markets increased, with those to China growing by 9.8% from a year ago and those to the U.S. by 8.5%, trade agency Enterprise Singapore said.

However, exports of electronics continued to weaken, dropping 21.3% year on year in December, after a 23.3% contraction in the previous month.

Singapore reports non-oil domestic exports to provide a better gauge of economic activity within its borders. This is because prices of refined oil products tend to be volatile while total exports include goods that are shipped through its container port.

Before December's uptick, exports had contracted for nine consecutive months.

On a month-on-month seasonally adjusted basis, non-oil domestic exports increased by 1.1% in December to S$14.3 billion ($10.6 billion), extending the previous month's 5.8% growth.

Irvin Seah, a senior economist at DBS, said December's showing "provided a glimmer of hope" that exports will grow this year despite the still-uncertain external environment.

Exports shrank 9.2% last year, United Overseas Bank estimates, the biggest contraction since 2009, as the trade war between the U.S. and China combined with flailing demand for electronics to sap trade.

Although the two countries have signed off on the first phase of a trade deal, economists are not convinced the standoff is over. Tariffs remain on $360 billion worth of Chinese exports to the U.S., and that will continue to weigh on global trade flows, Seah said.

Still, electronics could fare better, as countries begin rolling out 5G telecom networks, creating new demand for parts and components. The broader use of new technologies such as internet of things, artificial intelligence and driverless vehicles could also provide some impetus in coming quarters, according to Seah.

Maybank Kim Eng was more bullish about prospects for manufacturing and trade in Singapore. The brokerage noted that fixed asset investment commitments, covering incremental capital investment in facilities, equipment and machinery, rose to a seven-year high of S$15.2 billion last year from S$10.9 billion 2018, boosted by chemicals and electronics.

-- Kevin Lim

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