Bleak growth outlook plagues Singapore’s lacklustre exports in 2014

Electronics exports will not pick-up.

The last two months of the year will bring no reprieve to Singapore’s lacklustre exports in the last two months of the year. The countries non-oil domestic exports registered a 1.5% year-on-year contraction in October, led by a 3.6% year-on-year decline in electronics exports.

According to Maybank Kim Eng, further drags on non-oil domestic exports came from the lower shipments to neighboring ASEAN markets, namely Indonesia and Malaysia. Exports to key market Hong Kong also fell for the 13th consecutive month in October.

Maybank Kim Eng warns that NODX’s volatility bug highlights the structural and competitiveness issues plaguing export-based industries such as electronics, which is further compounded by sluggish global economic growth.

Meanwhile, HSBC notes that the 27 consecutive months of contraction in electronics NODX continues to weigh down the overall trend, as it makes up slightly less than one-third of entire NODX.

“We believe that the base-effect in electronics will continue to affect y-o-y readings until it wears off until early 2015, after which the electronics sector will only grow moderately at best, given domestic wage pressures stemming from the economic restructuring,” stated HSBC.

“However, external conditions do not inspire too much optimism, especially in the EU and Japan. Although Eurozone GDP has come in slightly above consensus in 3Q, conditions are still weak, while Japan has entered into a technical recession last quarter,” HSBC added.