Singapore, a major regional transhipment hub and home to the world’s second busiest container port, provides a bird’s eye-view of the movement of goods to and from the region.
The wealthy city-state’s August trade data, reported on Tuesday, showed non-oil domestic exports dropped 6.2 percent from a year ago, falling year-on-year for a seventh consecutive month. The figure was also worse than the estimates of all 11 economists polled by Reuters, who had a median forecast of a 2.3 percent on-year rise.
Trade agency International Enterprise Singapore also revised down domestic exports data for July.
Barclays and Credit Suisse expect Singapore’s gross domestic product could shrink sequentially in the third quarter after growing an unusually strong annualised quarter-on-quarter pace of 15.5 percent in April-June.
“Numbers such as retail sales, the food and beverage index, and FX turnover have all corrected sequentially in the third quarter,” said Credit Suisse economist Michael Wan.
The data puts Singapore at odds with seemingly healthy regional export trends.
Non-oil re-exports from the city-state, for instance, grew 14.4 percent from a year ago, accelerating from July’s 8.1 percent expansion. The growth was led by re-export of electronics, which rose 25.1 percent in August from a year ago on the back of a sharp 36.3 percent rise in semiconductor shipments.
Re-exports are goods sent to Singapore for shipments to other countries. The biggest recipients of non-oil re-exports from the city-state last month were China, Hong Kong and Malaysia, according to IE Singapore.
“Regional trade is becoming more vibrant as can be seen from the re-exports portion… It’s just that people don’t want the products we are producing,” said United Overseas Bank economist Francis Tan.
The robust re-exports of electronics also points to demand for this sector gaining momentum.
Taiwan, home to some of the world’s largest chipmakers, last week reported August exports expanded for a fourth straight month as shipments to China, its largest market, rebounded.
The Philippines followed in a similar vein, reporting July electronics exports rising 11.2 percent from a year ago.
The healthy regional exports goes hand-in-hand with a recent run of upbeat data from the world’s two biggest economies, the United States and China.
Japan’s economy, the world’s third-biggest, is also on a more solid footing.
For Singapore’s manufacturers, however, a near term recovery doesn’t seem likely. In seasonally adjusted terms, non-oil domestic exports shrank 6.0 percent in August from July.
UOB’s Tan and other economists said the continued weakness in domestic exports last month meant Singapore could miss its target for non-oil domestic exports growth of 0 to 1 percent this year, although strong re-exports suggested trade-related services sectors will continue to do relatively well.
Singapore last month revised upwards its 2013 growth to 2.5 to 3.5 percent from an earlier 1-3 percent after second quarter gross domestic product came in much stronger than expected due to the strong growth in wholesale and retail trade as well as financial services.
Singapore’s exports tend to be unpredictable because a significant portion involves pharmaceuticals and oil rigs that can vary sharply from month to month.
The city-state’s key electronics sectors include disk media and PC components, which have not benefited from the boom in smart phones and tablets that are replacing personal computers.
Credit Suisse’s Wan, however, said a large part of the weakness in August domestic exports can be explained by the electronics sector, adding the divergence between Singapore’s exports and production in recent months suggest there could be a correction in coming months. (Reuters)