Singapore exports fall for second straight month
Singapore's exports fell for a second straight month in June, trade agency International Enterprise Singapore said on Thursday, hit by a slump in shipments of electronics.
Singapore's exports of electronics fell 17.4 percent year-on-year in June after a 15.3 percent decline in May, taking non-oil domestic exports down 4.6 percent in June - double the 2.3 percent drop forecast in a Reuters survey.
"This reinforces that Singapore's exports are underperforming... Singapore's exports are among the worst in Asia," said Tim Condon, head of research Asia for ING Bank in Singapore.
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"My conjecture is that this is a structural issue and it's related to the productivity drive, that some of Singapore's exporters have relocated to Malaysia," Condon said.
Electronics is a key driver of Singapore's exports but it is not as well positioned in the electronics supply chain to gain from growth in smartphones and other recreational tech products.
Singapore's exports have been underperforming while Malaysia's exports have outperformed, which is unusual as those two tend to move together, Condon added.
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As part of a push to increase the economy's productivity, Singapore's government has been working to reduce reliance on foreign labor, which has been politically unpopular.
Such efforts have led to a tight labor market, putting upward pressure on wage costs.
On a month-on-month basis, non-oil domestic exports rose a seasonally adjusted 1.5 percent in June, falling short of a 4.0 percent increase forecast by the Reuters poll.
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While that was an improvement from a 7.5 percent drop in May, the three-month moving average of the monthly percentage change in exports was barely positive at 0.8 percent, showing how exports have struggled to gain traction from one month to the next.
Singapore's non-oil exports also tend to be volatile because a significant portion comprises pharmaceuticals and oil rigs, whose orders and output can vary sharply from month to month.
Underscoring such volatility, exports of pharmaceuticals surged 24.3 percent from a year ago in June, after tumbling 26.3 percent in May.
Many economists had predicted at the start of the year that a recovery in the United States and European economies would boost Singapore's exports, but signs of that filtering through have yet to fully materialize.
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Non-oil domestic exports to the European Union were down 3.9 percent in June from a year ago, following a 22.6 percent drop in May. Exports to the United States fell 2.9 percent from a year ago, while shipments to China rose 5.3 percent.
The weak export numbers came in the wake of data earlier this week that showed Singapore's gross domestic product contracted in April-June for the first time in seven quarters, hit by a sharp drop in manufacturing activity that reflects tough structural and policy challenges facing the government and the economy.