Singapore trade marginally hit by Japan quake calamity

Near-term disruptions in the Japanese logistic supply and production network may cause minimal impact on Singapore's bilateral trade.

Japan accounted for $33.3b or 7.9% of total imports for Singapore, the 4th largest import market for Singapore in 2010. In terms of Singapore exports to Japan, Japan is the 6th largest export market accounting for $22.3b or 4.7% of total eports.

Singapore's NODX products drivers to the Japanese markets for last year, they were electronic products like ICs, parts of IC, and telecom equipment, as well as non-electronics products like pharmaceuticals, disk media products and measuring instruments. However, the Sendai area is not a key industrial area (unlike Kobe) so the hit to Japan's GDP is probably limited (IMF forecast for 2011 growth was 1.5% prior to earthquake), so there may be growth dip on the Q1-Q3 2011 but rebound subsequently.

So far, the anectodal evidence points to some suspension of manufacturing and/or automobile production for Toyota, Honda, Sony, Toshiba, Nippon Steel Corp, JX Nippon Oil & Energy Corp, Nissan and Sapporo Holdings. For now, the rolling power shortage may hinder industrial activity for the region concerned. However, one point to note is that once the Japanese rebuilding gets underway, expect that their infrastructure demand could actually rise, albeit Singapore is not typically the supplier of steel, train and tracks and like products.

Japanese visitors totaled 528, 817 (4.5% of total visitors arrival in 2010), so the impact on the Singapore tourism sector should be fairly limited.

On inflation: near-term, there could be some slight impact on Japanese fresh food imports into Singapore eg, sashimi and fish etc, albeit "seafood" only accounts for 1.3% weight in Singapore's CPI basket. But the bigger impact may be upside risk to global on fossils fuels will likely rise in the short-term, coupled with the MENA unrest.