Fear Of Technical Recession Looms As July Exports Fall

Source : The Business Times, August 19, 2008

Global slowdown does not augur well for sputtering electronics exports

Continuing their downward trend, Singapore's non-oil domestic exports (NODX) shrank by 5.7 per cent in July as the shipment of electronic goods continued to fall.

This followed a 10.5 per cent fall in May and an 11 per cent tumble in June, and some economists are predicting a technical recession after the economy grew just 2.1 per cent in Q2 - the slowest growth in five quarters, and following a revised 6.9 per cent pace in Q1.

'The fall (in non-oil domestic exports) will translate into weaker manufacturing activity, at least for the third quarter, raising the likelihood of a technical recession in 2008,' said Alvin Liew at Standard Chartered.

Said David Cohen, an economist at Action Economics in Singapore: 'The global outlook is looking darker with Japan and Europe probably slipping into recession, and the US still sputtering. It doesn't bode well for demand for Singapore's exports.' A technical recession is defined as two consecutive quarters of economic contraction.

Non-oil retained imports of intermediate goods (NORI) also fell 5 per cent in the month - worse than the 2.8 per cent drop in June, mainly due to lower NORI of consumer electronics, parts of PCs, diodes and transistors and integrated circuits.

Total trade jumped 21 per cent to $88 billion last month.

Minus oil, domestic exports put on a dismal show in July. For example, electronics shipments contracted 14 per cent over the same month last year.

'The contraction in electronic domestic exports was largely due to weaker domestic exports of parts of PCs, consumer electronics, disk drives and ICs,' International Enterprise (IE) Singapore said.

Non-electronic exports posted a slight improvement of 0.3 per cent - reversing its drop of 7.9 per cent drop in the previous month.

'The turnaround in non-electronic NODX was largely led by higher domestic exports of ships and boats, petrochemicals and non-monetary gold,' IE Singapore said.

Except for Indonesia, China, Hong Kong and South Korea, domestic exports to the rest of Singapore's top 10 markets declined in July. According to IE, the United States, the European Union and Thailand were the top contributors to the NODX's fall last month.

NODX shipments to the US were down 33 per cent year-on-year following a 24 per cent drop in June.

Domestic exports to the EU sank 27 per cent, against a 16 per cent decline in the previous month. Shipments to Thailand, which dipped 8.4 per cent in June, tumbled 22 per cent.

Exports to China grew 8.6 per cent last month, bouncing back from a 12 per cent contraction in June. Shipments to Hong Kong, which dipped 0.5 per cent in the previous month, crept up a paltry one per cent.

Exports to Indonesia jumped 29 per cent in July, recovering from a 7 per cent decline in June.