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September exports edge up but Europe disappoints

SINGAPORE — The Republic’s exports grew less than expected last month as electronics shipments once again declined and demand from the eurozone — the Republic’s largest export market — slowed, data from International Enterprise (IE) Singapore showed.

SINGAPORE — The Republic’s exports grew less than expected last month as electronics shipments once again declined and demand from the eurozone — the Republic’s largest export market — slowed, data from International Enterprise (IE) Singapore showed.

Non-oil domestic exports (NODX) rose 0.9 per cent on-year last month, compared with August’s 6 per cent increase and the 2.6 per cent estimated in a Reuters poll of economists, who had expected a firmer US recovery to lift demand for electronics here. But instead, electronics shipments contracted for a 26th month, falling by 4 per cent last month.

“This implies long-term issues within Singapore’s tech sector and its weakness is structural, not cyclical,” UOB economist Francis Tan said.

“In terms of cost competitiveness, we are losing out on the production of intermediate products — such as chips and integrated circuits (ICs) — to other regional centres such as Malaysia, Thailand and of course China.”

Reflecting that trend, exports of personal computer parts and ICs dropped 25.1 per cent and 5.5 per cent on-year last month. This offset the better performance of non-electronics exports, which grew 3 per cent on the back of petrochemicals’ 16.5 per cent growth and pharmaceuticals’ 8.1 per cent expansion.

“I simply don’t see an end to the current tech export slump. In fact, the share of electronics NODX to overall exports has dropped from 66 per cent in 2000 to 41 per cent in 2010 and now 29 per cent. The lower contribution will continue as part of Singapore’s economic restructuring,” Mr Tan noted.

Electronics shipments to the eurozone were particularly weak, dropping 23.3 per cent. Overall NODX to the region fell 3.6 per cent, following a 7 per cent growth in August.

The latest NODX data came a week after the International Monetary Fund cut its 2014 growth forecast for the eurozone to 0.8 per cent from 1.2 per cent previously, citing a near 40 per cent chance that the region may slip back into its third recession since 2008.

“Today’s reading shows that NODX will continue to face headwinds as the recovery in external growth conditions remains quite modest and has lost momentum as of late, especially with stalling growth in the eurozone,” HSBC regional economist Joseph Incalcaterra said, adding that Singapore’s full-year NODX will likely edge towards the lower end of the 1 to 2 per cent contraction estimated by IE Singapore.

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