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18-08-2011, 06:57 AM
Electronics is the culprit.
The Straits Times
Aug 18, 2011
SHOCK FOR SINGAPORE
Key exports down 2.8% last month
Biggest fall since October 2009 could signal technical recession in sight
By Melissa Tan
PLUNGING electronics sales sent non-oil domestic exports (Nodx) down last month, catching experts out and raising the spectre of a technical recession later this year.
The 2.8 per cent fall in Nodx from a year ago was the largest drop since the 6.2 per cent slide in October 2009.
The poor result was a bolt from the blue for market watchers: The median estimate of 12 economists surveyed by Bloomberg News was for an increase of 4.6 per cent.
DBS economist Irvin Seah called the numbers 'a glimpse of what lies ahead', adding: 'It probably has added another ugly stroke to a dismal outlook.'
Electronics exports dived 16.9 per cent in July from the same month last year, according to IE Singapore data out yesterday.
All key products took a battering: Exports of integrated circuit components and disk drives fell by half and personal computer components by 11 per cent.
Electronics exports have declined every month since February, according to IE Singapore.
The electronics gloom cast a shadow over the strong 48.5 per cent growth in pharmaceutical exports last month.
UOB economist Chow Penn Nee noted that 'pharma exports could provide some upside surprise in the later months of the year', and DBS' Mr Seah said he expected pharmaceutical sales to 'remain robust in the next two months'.
However, Mr Seah cautioned that the strong Singdollar played a significant part in July's poor figures.
'Apart from diluting export competitiveness... the stronger Singdollar essentially implies that local exporters are now getting less in SGD terms unless they have hedged their US dollar exposure,' he said.
He noted that the Singdollar has risen about 12 per cent against the greenback in the 12 months up to July but said it would be 'premature for the Monetary Authority of Singapore to ease its current exchange rate policy', due to inflation concerns.
Total trade for July fell to $78.8 billion, a 0.2 per cent decline from the same month last year. Nodx accounted for $14.4 billion of that last month and $14.8 billion in June.
Exports to major markets fell almost across the board. Nodx to Europe declined 11.4 per cent, and Nodx to the United States shrank by 3.2 per cent.
But exports to Japan expanded 9.5 per cent while those to China grew 10.2 per cent.
And Nodx to emerging markets increased 28 per cent, which IE Singapore attributed mainly to Latin America.
Yesterday's numbers follow the announcement from Prime Minister Lee Hsien Loong in Sunday's National Day Rally that Singapore's growth forecast had been revised downwards.
Mr Lee tipped expansion to come in at 5 per cent to 6 per cent, down from 5 per cent to 7 per cent previously.
But OCBC economist Selena Ling warned that growth 'may undershoot' the forecast if second-half growth remained 'tepid'.
Analysts also expressed concerns that the economy would go into a technical recession if growth this quarter contracts as it did in the second quarter of the year.
Ms Ling described the possibility as 'somewhat elevated', and Ms Chow said the export data supported her view of an impending recession.
But DBS' Mr Seah differed, saying that 'too much price and currency effects are embedded in the non-oil domestic export figures to provide a strong justification' for a technical recession.
melissat@sph.com.sg
The Straits Times
Aug 18, 2011
SHOCK FOR SINGAPORE
Key exports down 2.8% last month
Biggest fall since October 2009 could signal technical recession in sight
By Melissa Tan
PLUNGING electronics sales sent non-oil domestic exports (Nodx) down last month, catching experts out and raising the spectre of a technical recession later this year.
The 2.8 per cent fall in Nodx from a year ago was the largest drop since the 6.2 per cent slide in October 2009.
The poor result was a bolt from the blue for market watchers: The median estimate of 12 economists surveyed by Bloomberg News was for an increase of 4.6 per cent.
DBS economist Irvin Seah called the numbers 'a glimpse of what lies ahead', adding: 'It probably has added another ugly stroke to a dismal outlook.'
Electronics exports dived 16.9 per cent in July from the same month last year, according to IE Singapore data out yesterday.
All key products took a battering: Exports of integrated circuit components and disk drives fell by half and personal computer components by 11 per cent.
Electronics exports have declined every month since February, according to IE Singapore.
The electronics gloom cast a shadow over the strong 48.5 per cent growth in pharmaceutical exports last month.
UOB economist Chow Penn Nee noted that 'pharma exports could provide some upside surprise in the later months of the year', and DBS' Mr Seah said he expected pharmaceutical sales to 'remain robust in the next two months'.
However, Mr Seah cautioned that the strong Singdollar played a significant part in July's poor figures.
'Apart from diluting export competitiveness... the stronger Singdollar essentially implies that local exporters are now getting less in SGD terms unless they have hedged their US dollar exposure,' he said.
He noted that the Singdollar has risen about 12 per cent against the greenback in the 12 months up to July but said it would be 'premature for the Monetary Authority of Singapore to ease its current exchange rate policy', due to inflation concerns.
Total trade for July fell to $78.8 billion, a 0.2 per cent decline from the same month last year. Nodx accounted for $14.4 billion of that last month and $14.8 billion in June.
Exports to major markets fell almost across the board. Nodx to Europe declined 11.4 per cent, and Nodx to the United States shrank by 3.2 per cent.
But exports to Japan expanded 9.5 per cent while those to China grew 10.2 per cent.
And Nodx to emerging markets increased 28 per cent, which IE Singapore attributed mainly to Latin America.
Yesterday's numbers follow the announcement from Prime Minister Lee Hsien Loong in Sunday's National Day Rally that Singapore's growth forecast had been revised downwards.
Mr Lee tipped expansion to come in at 5 per cent to 6 per cent, down from 5 per cent to 7 per cent previously.
But OCBC economist Selena Ling warned that growth 'may undershoot' the forecast if second-half growth remained 'tepid'.
Analysts also expressed concerns that the economy would go into a technical recession if growth this quarter contracts as it did in the second quarter of the year.
Ms Ling described the possibility as 'somewhat elevated', and Ms Chow said the export data supported her view of an impending recession.
But DBS' Mr Seah differed, saying that 'too much price and currency effects are embedded in the non-oil domestic export figures to provide a strong justification' for a technical recession.
melissat@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/