Singapore August Exports Slow Sharply, Raising Recession Odds
09/16/2012| 10:43pm US/Eastern
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-- Exports drop 10.6%, versus a forecast 3.0% fall
-- Decline is broad-based as non-electronics shipments shrink
-- Weak exports put pressure on MAS to support growth
By Martin Vaughan
SINGAPORE--Singapore's exports shrank in August more than expected, as shipments of both electronics and non-electronic products to the European Union and China slowed sharply.
The city-state's non-oil domestic exports fell 10.6% in August from the same month a year earlier, trade promotion agency International Enterprise Singapore said Monday. That was a far steeper drop than the median 3.0% decline predicted by 11 economists in a Dow Jones Newswires poll, and not one of those economists had predicted as sharp a decline.
The drop raises the odds that the economy will experience a recession, and puts more pressure on the Monetary Authority of Singapore to relax its bias toward steady appreciation of the Singapore dollar, at its upcoming October policy meeting.
"We are now calling for a technical recession as with this weak exports figure, the chances of recession have dramatically increased," said Michael Wan, an economist at Credit Suisse. The economy contracted in the second quarter, and a third-quarter contraction would mark a recession.
The data add to signs of a slowdown in trade and economic growth across Asia. Chinese exports grew 2.7% on year in August, down sharply from growth rates above 20% a year earlier; imports, on the other hand, unexpectedly declined. Exports in other bellwether economies such as South Korea and Taiwan shrank in August. Purchasing managers' indexes show manufacturing contracting in most countries of the region, with a few eking out only marginal growth.
In Singapore, the drop in non-oil exports follows six straight months of modest expansion. Electronics exports led the decline, which comes as weakness in the global economy and slowdown in China have damped demand for computer parts and other goods. Electronics shipments fell by 11% on year in August, after expanding 2% in July.
But non-electronics shipments also fared poorly, falling 10.4% on year, compared with a 7.8% rise last month. An 87% decline in the shipbuilding sector dragged the figure. Pharmaceutical exports fell 3.2%, after growing 1.3% in July.
"Over the past few months, electronics has been pretty weak, but non-electronics sector had propped the overall exports up. The August figure points to a more broad-based decline," said Credit Suisse's Wan.
Compared with the previous month, exports fell 9.1% in seasonally adjusted terms, after contracting 3.6% on month in July. Nine economists in the poll had projected a median 0.7% contraction from July.
Shipments to the E.U. lagged most, falling 28.7% in August in nominal terms after a 1.5% decline in July. Exports to China also dropped, falling 4.4% after growing 8.0% the previous month.
Exports to the U.S. grew by 0.7%, far too little to offset the large drop in shipments to Europe, while exports to Taiwan and South Korea continued to register strong growth.
Write to Martin Vaughan at martin.vaughan@dowjones.com
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