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July exports fall for third month as restructuring reshapes industries

SINGAPORE — Local exports fell for the third consecutive month after a contraction in the non-electronics sectors added to the persistent weakness seen in the shipment of electronics, further signalling that demand for goods made in Singapore is likely to remain lacklustre throughout the rest of the year.

Last month, shipments of electronics products contracted by 7.9 per cent on-year. PHOTO: BLOOMBERG

Last month, shipments of electronics products contracted by 7.9 per cent on-year. PHOTO: BLOOMBERG

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SINGAPORE — Local exports fell for the third consecutive month after a contraction in the non-electronics sectors added to the persistent weakness seen in the shipment of electronics, further signalling that demand for goods made in Singapore is likely to remain lacklustre throughout the rest of the year.

Data released by International Enterprise (IE) Singapore yesterday showed non-oil domestic exports (NODX) fell by 3.3 per cent on-year last month, following June’s 4.6 per cent decline, as shipments to all major markets except the United States, the eurozone, China and Taiwan declined.

These figures are not surprising after IE Singapore adjusted downward its full-year NODX forecast to a decline of 1 to 2 per cent just last week, UOB economist Francis Tan said.

“Once again, NODX was pressured by electronics’ contraction, which has now stretched to 24 straight months. A two-year decline means it’s not cyclical — the electronics sector may be on a persistent, structural decline,” he said. “And while we had expected the revival of the global personal computer market this year to lift Singapore’s tech exports, that recovery may not be strong or fast enough to benefit us.”

Last month, shipments of electronics products — a key driver of the local manufacturing industry — contracted by 7.9 per cent on-year. The fall was narrower than the 17.4 per cent decline in June, but exports of integrated circuits, PC parts and disk media products continued to drop, respectively, by 5.1 per cent, 14.5 per cent and 18.5 per cent on-year last month.

“A key driver for stronger tech exports will be the improving capital expenditure in the US corporate sector. We’re starting to see that — but I wouldn’t count on a strong lift from that by the end of this year,” ANZ economist Daniel Wilson said.

The prolonged weakness in electronics exports should not be a surprise given that production in the industry is slowing, giving way to more services activities amid Singapore’s ongoing economic restructuring, the Ministry of Trade and Industry said in its second-quarter economic survey last week.

“We do see services becoming a larger contributing factor to our economy. As this trend continues, the NODX data will probably become less relevant as a gauge for Singapore’s external-led growth,” Mr Wilson noted. “How long will this transformation take? Nobody knows exactly, but it will be a multi-year process.”

In this process, the economy must continue to endure short-term pains, UOB’s Mr Tan added.

“We may continue to see production and exports of certain products struggling. But if we’re successful in steering industries towards restructuring, the end result is, hopefully, that we will become like Switzerland, drawing foreign investments with high-value activities,” he said.

Meanwhile, Singapore’s non-electronics NODX contracted by 1.1 per cent after June’s 1.3 per cent rise, reflecting the volatile nature of pharmaceutical and offshore marine engineering exports. “But in 2014’s second half, I’m hoping the non-tech exports — particularly petrochemicals — will be able to drive NODX. If this materialises, we forecast an average 1.4 per cent rise to NODX between August and December, a slight improvement from the 2.4 per cent decline recorded in the January-July period,” Mr Tan noted.

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