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Economy

Singapore exports rebound in October, allaying slowdown fears

Shipments to China surge but exports growth likely to moderate in next few months

SINGAPORE (Nikkei Markets) -- Singapore's key exports rebounded in October after a surprise contraction the previous month, indicating the city-state's trade-driven economy remains on the ascent.

According to figures released by trade agency International Enterprise Singapore on Friday, non-oil domestic exports rose 20.9% in October from a year ago, following a decline of 1.1% in the preceding month.

While gross domestic product is expected to grow by around 3% this year, there are concerns that the regional boom in trade is beginning to slow in line with the slower expansion in China.

October exports data from South Korea and Taiwan showed signs of the electronics-led exports recovery tapering in the final quarter of the year, but "the Singapore data doesn't support this view," said ING economist Prakash Sakpal.

The sharp rise in exports, which exceeded consensus forecasts of around 12%, reflected the low base a year ago, IE Singapore said.

Shipments of electronics increased by 4.5% on-year in October following an 8.0% decline in the previous month, while non-electronics expanded by 28.5% after gaining 1.9% in September.

China was the city-state's biggest export market, with shipments growing 53.3% year-on-year. Among other major trading partners, exports to the European Union and Malaysia also grew strongly but sales to Taiwan, Hong Kong and Indonesia fell from a year ago.

On a month-on-month seasonally adjusted basis, Singapore's non-oil domestic exports rose by 12.5% to 14.7 billion Singapore dollars ($10.9 billion) in October after declining by 11.0% in September.

Singapore reports non-oil domestic exports as these provide a better gauge of the island's 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 that are shipped through Singapore's mega container port, the world's second busiest after Shanghai's.

IE Singapore said October's growth in key exports was led by increased shipments of pharmaceuticals and petrochemicals, which rose 25.1% and 22.9% respectively from a year earlier.

According to ING's Sakpal, with the seasonal product replacement cycle for flagship mobile devices coming to end, non-oil domestic exports growth is likely to ease in the months ahead.

Maybank Kim Eng economist Lee Ju Ye noted that Singapore's non-oil re-exports, or NORX, a proxy for wholesale trade services, fell for the first time in 11 months as the decline in non-electronics offset the small increase in electronics.

"We expect the year-on-year growth to soften in the next two months as high base effects start to kick in. The decline in NORX also suggests that wholesale trade services growth may moderate in 4Q17," she wrote in a note to clients.

Maybank Kim Eng expects Singapore's GDP growth to come in at 3.4% this year, higher than the government's forecast of 2.5% to 3%. The official forecast is likely to be upgraded on Thursday when the Ministry of Trade and Industry releases detailed third quarter GDP data.

--Kevin Lim

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