Darker economic outlook after Singapore key exports’ surprise 14.7% drop in May

[The_King]

ECONOMISTS expect a bleaker second-quarter economic outlook in Singapore – with some warning of a technical recession – after non-oil domestic exports (NODX) were down 14.7 per cent in May. The decline far surpassed the median 7.7 per cent drop forecast by economists in a Bloomberg poll.

Shrinking for the eighth consecutive month, NODX in May recorded a steeper slide than April’s 9.8 per cent contraction, data from Enterprise Singapore (EnterpriseSG) showed on Friday (Jun 16). Both electronics and non-electronics exports continued to decline on a year-on-year basis.

Noting the “broadly weaker-than-expected” readings in 2023 so far, RHB senior economist Barnabas Gan expects NODX to contract into the third quarter, before recovering in the fourth quarter. RHB downgraded its full-year NODX growth forecast to minus 8 per cent, from 0 per cent previously.

 

Gan now predicts a double-digit contraction for May’s industrial production in export-oriented Singapore, and a consequent 1.4 per cent year-on-year fall in Q2 gross domestic product.

UOB also cut its NODX growth forecast to minus 10 per cent for the year, compared with minus 5.5 per cent before. The bank’s senior economist Alvin Liew and RHB’s Gan agreed that there is a heightened risk of a technical recession in the first half of 2023.

In the latest quarterly survey of professional forecasters, private-sector economists also downgraded their full-year economic growth forecast for Singapore, partly due to a deeper slump in NODX.

 

On a seasonally adjusted monthly basis, NODX dropped 14.6 per cent last month, reversing from April’s 2.6 per cent growth.

This was “largely a seasonal correction” to strong momentum earlier, but NODX momentum is far from a meaningful recovery, noted HSBC economist Yun Liu. Both electronic and non-electronic shipments declined month on month.

Key exports’ value fell to S$13.8 billion in May, from S$16.1 billion in April. It also remained lower than the year-ago period’s S$17.1 billion and 2022’s average of S$16.6 billion.

Year on year, electronics exports shed 27.2 per cent in May, deepening from April’s 23.3 per cent loss in their tenth consecutive month of contraction.

The decline was led by integrated circuits (ICs) (minus 39.2 per cent), disk media products (minus 41.6 per cent) and parts of ICs (minus 48.7 per cent).

This was the worst streak since the 2018/2019 electronics downcycle, which lasted 14 months, Liew said.

“A bottom in Singapore’s electronics exports slump is yet to be seen,” said DBS economist Chua Han Teng, noting persisting uncertainty given that inventory destocking in the global semiconductor market, for example, is still ongoing. “This is despite the medium-term potential and optimism over artificial intelligence (AI) chips observed in the news recently.”

But HSBC’s Yun said that there are “some initial signs that Singapore’s trade may not be far from bottoming out”.

Non-electronics shipments in May lost 10.7 per cent from the year-ago period, accelerating from the 5.8 per cent decline in April. Contributing most to the drop were specialised machinery (minus 23.4 per cent), petrochemicals (minus 22.8 per cent) and pharmaceuticals (minus 14 per cent).

Barclays economist Brian Tan pointed out that shipments for usually-volatile pharmaceuticals more than halved sequentially in May – but this was a normalisation after it “surged to heady levels in March-April”.

The latest NODX readings come after Singapore’s manufacturing purchasing managers’ index (PMI) remained in contractionary territory in May, for the third straight month.

On the whole, NODX to Singapore’s top 10 markets declined in May, led by falls in exports to Hong Kong (minus 41.2 per cent), Malaysia (minus 26.2 per cent) and Taiwan (minus 19.4 per cent).

Shipments to most top markets posted declines, except for NODX to China and the US. Key exports to the EU and South Korea contracted in May, after posting growth in the month before.

NODX to the US grew, up 4.8 per cent in May – but it had posted 40.7 per cent growth in April.

Shipments to China, which contracted 20.9 per cent year on year in April, expanded 3.7 per cent in May. This is despite post-pandemic economic recovery in the country losing steam, for instance in the industrial sector, said Chua.

Liew added: “In nominal value terms, China retook the top position as Singapore’s biggest NODX destination at S$2.7 billion.”

But economists agreed that it is premature to conclude that growth in NODX to China will be sustained.

In line with the NODX decline, total trade fell 17.9 per cent year on year in May, against April’s 18.9 per cent drop. Exports last month contracted by 15.2 per cent, while imports fell by 20.7 per cent.

On a seasonally adjusted monthly basis, total trade shrank 5.6 per cent in May, extending April’s 3.7 per cent dip; the level of total trade reached S$94.5 billion, less than the preceding month’s S$100.1 billion. Both exports and imports decreased.

Gan said that “disappointing trade dynamics” were also observed in other Asian economies in May, such as Taiwan, South Korea and China, which posted year-on-year export declines. Export-oriented Asian economies continued to record contractionary PMI prints.

Still, he noted “some improvement in risk appetite following the uptick in manufacturing momentum across Asia and in recent global equity valuations”.

Key global central banks likely approaching peak rate objectives, easing inflation dynamics across key Asian economies, and potentially more clarity on China’s reopening efforts could lead to a better global growth prognosis in the second half of 2023, said Gan.

Yun added that a “punchier boost” from China’s reopening in H2 could have travel-related services “come to the partial rescue” and help prevent a recession this year.

[socrates469bc]

jin kumgong.

 

if limpeh wants to know how the economy is doing, limpeh just go to psa to look at port traffic.

 

wahahahahahahahahahahahahaha

[The_King]

11 minutes ago, socrates469bc said:

jin kumgong.

 

if limpeh wants to know how the economy is doing, limpeh just go to psa to look at port traffic.

 

wahahahahahahahahahahahahaha

world shipment is down

 

https://www.bloomberg.com/news/newsletters/2023-05-04/supply-chain-latest-global-shipping-slowdown

[Bigbird]

20 hours ago, socrates469bc said:

jin kumgong.

 

if limpeh wants to know how the economy is doing, limpeh just go to psa to look at port traffic.

 

wahahahahahahahahahahahahaha

 

Senpai, when u go, can bring me too!