Singapore’s exports in June extended the longest run of declines since the global financial crisis, suggesting economic growth last quarter may have been less than the government initially estimated.
Non-oil domestic exports slid 8.8 percent from a year earlier, falling for a fifth month, the trade promotion agency said in a statement today. The median of 17 estimates in a Bloomberg News survey was for a 5.8 percent drop.
While Singapore’s economy grew at the fastest pace in more than two years last quarter as services strengthened and manufacturing rebounded, improvements haven’t been matched in shipments to the U.S. or Europe. China’s Commerce Ministry said today it will release measures to support trade “soon,” as nations from South Korea to Malaysia reported export weakness, and the Asian Development Bank yesterday trimmed forecasts for growth in developing Asia.
“External headwinds remain strong,” Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd., said before the report. “Data from the U.S. have been mixed and Europe is still stuck in recession.”
The Singapore dollar was little changed at S$1.2625 against the U.S. currency as of 12:50 p.m. local time. The currency has weakened about 3 percent in the past six months even as the central bank maintained a policy of allowing gradual gains.
Demand from the U.S., Europe and Japan stands out for its “weakness and that is still a cause for concern,” said Alvin Liew, a senior economist at United Overseas Bank Ltd. (UOB) in Singapore. “The recovery process for exports, especially for electronics, could be delayed.”
Singapore’s gross domestic product rose an annualized 15.2 percent in the three months through June from the previous quarter, when it grew 1.8 percent, the Trade Ministry said July 12. The figures were computed largely from data in the first two months of the quarter, and revisions will be released in August.
The island’s shipments of electronics dropped 12.4 percent in June from a year earlier, extending the slump to an 11th month, today’s report showed.
“The weak growth coming from the advanced economies, the weak demand, is having a much bigger effect than we had anticipated,” ADB assistant chief economist Joe Zveglich told Bloomberg Television’s Susan Li in an interview in Tokyo.
The International Monetary Fund reduced its global growth forecast this month as the U.S. recovery weakens, China levels off and Europe’s recession deepens. China’s economy slowed for a second quarter in the three months through June as growth in factory output and fixed-asset investment eased and Premier Li Keqiang reined in a credit boom.
China’s current trade situation is “severe,” and the appreciation of the yuan has weakened the country’s cost advantage on products, Commerce Ministry spokesman Shen Danyang said today.
Bank of Japan minutes released today from a June meeting showed policy board members’ view that China has become less likely to return to a “high growth path.” The Bank of England will release minutes of the first meeting led by Governor Mark Carney, while all economists in a Bloomberg survey forecast Canada will leave interest rates unchanged at 1 percent.
In the U.S., housing-starts data are due, and the Federal Reserve will release its Beige Book survey of economic conditions. Fed Chairman Ben S. Bernanke will deliver his semi-annual monetary policy report to Congress, followed by questions from lawmakers. On July 10, Bernanke said that “highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy.”
Singapore’s exports to the world’s largest economy fell for a second month in June, declining 15.9 percent. The U.S. was Singapore’s fifth-biggest trading partner in 2012 after Malaysia, the European Union, China and Indonesia. Shipments to the EU tumbled 33.6 percent. Swings in demand for pharmaceuticals can make Singapore’s export figures volatile.
Located at the southern end of the 600-mile (965-kilometer) Malacca Strait, Singapore is home to one of the world’s busiest container ports. The government has boosted the financial services and tourism industries to become less reliant on exports.
The island’s non-electronics shipments, which include petrochemicals and pharmaceuticals, fell 7.1 percent last month from a year ago. Petrochemical exports climbed 5.7 percent, while pharmaceutical shipments dropped 35.4 percent.
The government forecasts exports will rise 2 percent to 4 percent this year and predicts economic growth of 1 percent to 3 percent. Non-oil exports rose a seasonally-adjusted 3.2 percent last month from May, when they dropped 1.1 percent, today’s report showed.