SINGAPORE (Nikkei Markets) -- The unexpected decline in Singapore's key exports in February is yet another sign that factory output in the city-state is slowing even as external risks grow.
So far, economists have been reasonably bullish about growth prospects for the trade-driven economy.
While Friday's numbers from the trade agency haven't changed that view with many cautioning against reading too much into monthly data, they have focused attention on the vulnerabilities.
According to International Enterprise Singapore, non-oil domestic exports fell 5.9% in February from a year ago, as overseas shipments of electronics and petrochemicals declined. In January, the indicator bettered expectations with a 12.9% expansion.
Although the decline was partly due to the Chinese New Year, which involves an extended holiday and shrinks the number of working days in the month, it nevertheless came as a surprise - economists expected shipments to grow by around 5%. The on-year fall in core exports was the first since September last year and the steepest since October 2016, according to Bloomberg data.
Compared to a month ago, non-oil domestic exports declined by 2.6% to 14.7 billion Singapore dollars ($11.2 billion) after seasonal adjustments, accelerating from January's 0.4% decline, IE Singapore said.
Singapore reports non-oil domestic exports as these provide a better gauge of economic activity. This is because prices of refined oil products tend to be volatile, while total exports include the billions of dollars of goods produced elsewhere and shipped through its mega container port, the world's second busiest after Shanghai.
Last month, IE Singapore said it expects non-oil domestic exports to grow by 1% to 3% in 2018 following last year's expansion of 8.8%.
Commenting on the latest exports data, Japanese investment bank Nomura said the weakness was due to more than just the "moving holiday" effect of the Chinese New Year. The holidays started late in January last year.
For the first two months of the year, non-oil exports growth averaged 3.5%, Nomura said, a significant slowdown from 10.9% in the final quarter of last year.
"While there are some signs that economic growth may be broadening to domestic demand last year, the recovery likely remains fragile and susceptible to a downturn in the electronics cycle," Nomura added. The investment bank forecasts Singapore's economic growth to slow to 2.5% in 2018 from last year's 3.6%.
A Monetary Authority of Singapore survey released earlier this week showed private sector economists have a median gross domestic product growth estimate of 3.2% for this year.
According to IE Singapore, shipments of electronics fell 12.3% on year in February, declining for the third consecutive month after growing for most of 2017. Electronics exports fell by 3.9% in January.
Electronics and precision engineering account for around 40% of Singapore's manufacturing, which in turn accounts for about a fifth of GDP.
Among non-electronic products, non-monetary gold exports fell by 49.4% from a year ago, while shipments of petrochemicals and pharmaceuticals decreased by 12.9% and 8.0%, respectively.
IE Singapore said the decline in non-electronics came after eight straight months of expansion.
In terms of key markets, shipments to the U.S. grew by 54.7% on year in February but this was more than offset by a 23.6% drop in exports to China and a 15.8% decline in shipments to Europe.
Song Seng Wun, an economist at CIMB Private Bank, was more bullish about prospects for exports, noting that forward-looking indictors such as new orders continue to be positive, according to Singapore's Purchasing Managers Index.
He expects key exports to rebound by around 13% on year in March and grow by about 6% for the full year, provided "U.S. trade silliness is kept to a minimum."
In its latest quarterly survey, MAS noted that nearly nine in 10 economists voiced significant concerns about the possibility of a global trade war, more than double that in the December survey.