What you need to know about the ''massive drop'' in pharmaceutical exports

It plunged by 28.5%.

According to DBS, the outcome for this morning’s non-oil domestic export figures have indeed turned out to be mixed. To begin with, though a sequential expansion of 1.1% MoM sa has been recorded, it pales in comparison to the 8% surge in the previous month.

DBS noted that pharmaceutical exports plunged by about 28.5% nsa compared to March. That is a massive drop and it has certainly struck a sour note with the industrial production level in the same month and probably the second quarter GDP growth as well.

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As it seems, the first glimpse on the second quarter outlook hasn’t been great. This reinforces our belief that near term outlook remains dicey. Although a gradual normalisation/recovery process is still underway, the pace will be tepid.

Nonetheless, March’s number is strictly a technical rebound after the seasonal slump in February. So, some degree of moderation is expected. But the point is that, at 1.1%, that is below the market expectation of a healthy 3.5%. Hence, while the robust expansion in March is unlikely to be sustained, this subsequent fall back to reality has surprisingly been sharper than expected.

The saving grace is that key electronics export performance has improved. Although still in contraction, the pace of decline has eased to -9.0% YoY, up from -17.9% YoY previously. More important, electronics export sales was up by 4% (nsa) compared to the previous month. On the contrary, the main drag came from the pharmaceutical segment.

Poor external demand and structural drag on competitiveness present a double whammy on export performance. A bumpy road lies ahead for the Singapore economy, weighed down by the on-going restructuring and external headwinds.