Hopes fade for Singapore's exports as Asian demand crumbles

Expect more declines in coming months.

Weak demand from regional trading partners caused Singapore's non-oil domestic exports (NODX) figure to slump by 7.9% year-on-year in April. Analysts warn that there is little hope on the horizon for the city-state's exporters, as demand is expected to stay muted on back of weak regional trading sentiments.

"The medium term trend for Singapore’s NODX performance is still a weak one and we should expect NODX to clock in few more contractions in next few months although we are not looking for double-digit declines," said Alvin Liew, economist at UOB.

He noted that the top contributors to the NODX contraction in April were Taiwan, which declined 22.5% year-on-year, South Korea, which declined 26.7%, and Indonesia, which declined 20.4%.

"NODX will remain weak in the next few months and while we are expecting a 3.3% y/y contraction in 1H 2016, the decline may be deeper than that judging by the protracted weakness seen in March-April NODX declines," Liew noted.

Meanwhile, BMI Research noted in a report that shipments to China—Singapore's largest trading partner—is expected to stay under pressure as the regional powerhouse continues to search for ways to reduce overcapacity in its economy.

“Singapore's exports have reoriented themselves towards greater China in a major way over the past decade, with total NODX to Hong Kong and China having eclipsed Singapore's exports to the US and EU. While this relationship may still play to Singapore's advantage in the long-run, China is set to experience a deeper slowdown in the near-term as it enters a painful economic restructuring process,” BMI Research noted.