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Singapore July exports tumble more than expected, hamstringing trade-dependent economy

Pasir Panjang PSA container port in Singapore.
Roslan Rahman | AFP | Getty Images

Singapore's exports in July tumbled more than expected as sales to China and the United States declined, leaving the trade-reliant economy struggling to restore momentum and keeping pressure on the central bank to deliver further stimulus.

Non-oil domestic exports (NODX) fell 10.6 percent last month from a year earlier, the trade agency International Enterprise Singapore said in a statement on Wednesday. That was far worse than the median forecast of a 2.5 percent slump in a Reuters poll and a revised 2.4 percent loss in June.

On a month-on-month, seasonally adjusted basis, exports declined 1.8 percent in July, missing a forecast of a 0.2 percent rise in the survey.

The weak trade numbers will put the focus back on the Monetary Authority of Singapore after its surprise easing in April when it set the rate of appreciation of the Singapore dollar's policy band at zero percent.

Some analysts see prospects of further easing at its October meeting to restore momentum, but MAS deputy managing director Jacqueline Loh last week said the current monetary policy stance remains appropriate for 2016 even as the government cut its economic growth forecast.

"External conditions still look very tepid in terms of demand," said Edward Lee, head of ASEAN Economic Research at Standard Chartered Bank. Lee however believes the hurdle for another easing by MAS soon after April remains high for now.

The economy is now expected to expand 1-2 percent this year, lower than the previous government forecast of 1-3 percent on concerns over Britain's vote to leave the European Union and weakening global demand.

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IE Singapore last week said the NODX is expected to shrink 3 to 4 percent this year.

Exports to China, Singapore's top overseas market, fell 16.6 percent in July from a year earlier, much more than a 9.9 percent decline in June.

That came against the backdrop of a slowdown in China, with activity in July showing an underpowered economy.

Shipments to the United States slumped 19.1 percent last month from a year earlier, compared to a 5.9 percent increase in June.

Sales to the European Union gained 3.0 percent in July on-year after a 5.8 percent contraction in June.

Electronics exports in July shrank 12.9 percent from a year earlier.

The weak trade numbers mirror depressed activity at Singapore's factories, which hit a five-month low in July, contracting for a 13th consecutive month on falling new orders and exports, a survey showed earlier this month.

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