Singapore’s exports fell more than economists estimated in August as shipments of electronics dropped and companies sold fewer goods to Europe. The country’s currency weakened.
Non-oil domestic exports slid 10.6 percent from a year earlier, after a revised 5.7 percent increase in July, the trade promotion agency said in a statement today. The decline, the first since March, exceeded all 15 estimates in a Bloomberg News survey, where the median was for a 4 percent drop.
Europe’s protracted debt crisis, a U.S. jobless rate stuck above 8 percent and a slowdown in China are damping demand for Asian goods and commodities, prompting Hong Kong’s Trade Development Council to cut the island’s export forecast today. The weakening global outlook has prompted Singapore’s government to trim its 2012 economic growth forecast and may put pressure on the central bank to ease its monetary policy stance.
“Underlying demand for electronic exports is still struggling,” Michael Wan, a Singapore-based analyst at Credit Suisse Group AG, said in a note today. “With this weak print, we suspect gross domestic product will contract for a second consecutive quarter in the third quarter, pushing Singapore into technical recession.”
Credit Suisse predicts the central bank will allow slower gains in the local dollar at the next policy review in October. The Monetary Authority of Singapore uses the exchange rate to manage inflation.
The Singapore dollar fell 0.3 percent to S$1.2233 against the U.S. currency as of 5:23 p.m. local time, paring its gain for the year to about 6 percent. It is the best performing among 11 Asian currencies tracked by Bloomberg this year.
Singapore’s overseas sales may rise 4.2 percent in 2012, a central bank survey of economists released last week showed, compared with a 5.6 percent gain predicted in the June survey. The Hong Kong Trade Development Council cut its full-year export forecast to a contraction of 1 percent, according to a release on its website today.
“I don’t think there is a sharp turnaround shortly in sight,” Selena Ling, a Singapore-based economist at Oversea-Chinese Banking Corp., said before the report. Exports may only recover in 2013, she said.
Singapore’s electronics shipments by companies such as Venture Corp. fell 11 percent in August from a year earlier, after climbing 2 percent the previous month.
Non-electronics shipments, which include petrochemicals and pharmaceuticals, decreased 10.4 percent. Petrochemicals exports gained 1.3 percent, while pharmaceutical shipments slid 3.2 percent after rising 1.3 percent in July.
Singapore’s non-oil exports fell a seasonally adjusted 9.1 percent last month from July, when they dropped 3.6 percent, today’s report showed.