Trade with China shows fourth month of consecutive decline
SINGAPORE — Dec. 17, 2018: Singapore’s exports fell for the first time in eight months on a year-on-year basis in November with shipments to China, its biggest market, continuing their decline on slowing growth in the world’s second largest economy.
The contraction comes as economists grow increasingly worried about the impact of Sino-U.S. trade tensions on demand from China, with many expecting the dispute to hurt the city-state’s trade dependent economy in months to come.
Singapore’s non-oil domestic exports fell 2.6 percent in November year-on-year, a sharp contrast to the 1.2 per cent
increase predicted by economists in a Reuters poll, according to the data from trade agency International Enterprise Singapore today. It was also sharply down from the revised 8.2 per cent rise the month before and the first negative reading since March.
A significant fall in shipments in the volatile pharmaceuticals sector played a role in driving exports lower,
however, the decline also comes on top of a more established weakening trend in trade with China.
“While domestic exports to the U.S. remained healthy, shipments to China continued to weigh on overall growth,” Sian Fenner, an economist at Oxford Economics said in a research note to clients.
“Notwithstanding the recent truce in the U.S.-China trade war, we think weaker Chinese import demand, amid increased trade protectionism, will increasingly weigh on exports and Singapore GDP growth over 2019,” she added.
Trade to China, which has been in decline for most of this year, fell for the fourth consecutive month in November, down 16 per cent from a year earlier, compared with the previous month’s 25.8 per cent decline.
“China growth has moderated, and that’s the primary reason (for the declining exports to China),” CIMB economist Song Seng Wun told Reuters.
“If you look at retail sales, it’s quite indicative that Chinese macro fundamentals have weakened,” he added.
China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as the economy lost further momentum, heaping pressure on Beijing to defuse its trade dispute with the United States.
On a seasonally adjusted month-on-month basis, exports contracted 4.2 per cent in November after growing 4.2 per cent in October. The poll predicted a 0.6 per cent expansion from the month before.
Shipments of pharmaceuticals rose 8.4 per cent in November, slowing significantly from the 89.7 per cent surge seen in the previous month.
Electronics exports rose for the first time this year at 4.5 per cent in November from the year earlier, recovering from the 3.6 per cent contraction seen in October.
“Even as electronics exports turned positive in November, this is unlikely to last due to the high base effects from 2017 and the decelerating global tech cycle,” UOB said in a research note.
“We also continue to be concerned about the U.S.-China trade developments which will certainly cloud the outlook for a very trade-dependent Singapore,” it added.