Singapore exports suffer biggest fall in three years as exposure to Chinese economy, US trade war bites

Date: Monday, June 17, 2019
Source: South China Morning Post

  • New data showed that Singapore's non-oil exports fell by 15.9 per cent in May, with exports to China and Hong Kong down 23.3 per cent and 24.8 per cent respectively
  • Broad-based decline most keenly felt in important electronics sector, with analysts suggesting a ‘global technology slump’

Concerns over Singapore’s exposure to the Chinese economy mounted on Monday after new data showed that its non-oil exports fell by 15.9 per cent in May, the largest decline for more than three years.

Exports to China and Hong Kong slumped by 23.3 per cent and 24.8 per cent from a year earlier respectively, showing Singapore’s vulnerability to fluctuations in regional trade as an important trade and shipment hub for Asia-Pacific.

Many of the goods bound for China from other nations pass through Singapore and are included in the data, since they count as re-exports. Similarly, many goods entering Hong Kong’s docks are bound for China, so the aggregate decline paints a bleak picture for demand among consumers and manufacturers in China.

China’s economic slowdown was laid bare by a series of headline-grabbing data releases recently, including a 17-year low growth figure for industrial production, which measures China’s manufacturing and mining sectors. Of more concern to Singapore, however, would have been the 8.5 per cent drop in imports, shown in data released by the National Bureau of Statistics last week.

China and Hong Kong account for 24 per cent of Singapore’s shipments, meaning that the city state will feel continued economic pain, should China’s downturn – closely linked to the trade war with the United States – persists.

Despite the sizeable decline in non-oil exports, the figure beat expectations, with a survey of analysts expecting a 16.5 per cent fall, due to a better-than-expected level of pharmaceutical shipments out of the Port of Singapore.

The electronics sector suffered a significant decline, with year-on-year exports falling by 31.4 per cent, with analysts warning of a “global technology slump”, indicated by the data.

“The trade war is damaging Asia, but it is the global technology slump [of which China's technology war with the US is only a recent part] which is doing the most damage to exports in the region. Put another way, even on the very unlikely assumption of an all-encompassing trade agreement at the G20 with President's Xi [Jinping] and [Donald] Trump, and the immediate removal of tariffs, electronics exports are going to continue to be weak,” said Robert Carnell, chief economist for Asia-Pacific at ING.


Indicative of the technology decline was the warning last week from US chipmaker Broadcom, that there would be a slowdown in the semiconductor sector due to the trade tensions.

However, Singapore’s slump was broad-based as exports of civil engineering equipment parts fell by 92.4 per cent, while non-monetary gold – gold not held by central banks as reserve assets – fell 72.4 per cent and petrochemicals fell 14.7 per cent.

Outbound shipments to Taiwan also fell by 34.7 per cent. Taiwan’s economy has been among the hardest hit by the US-China trade war, given the huge presence of Taiwanese manufacturers in China. Taiwan’s imports fell by 5.9 per cent in May, well below a consensus poll which had expected 1.25 per cent growth.

Singapore’s exports to Japan, meanwhile, fell by 31.2 per cent in May, as policymakers in Tokyo also scramble to contain the impact of the ongoing trade war.


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