Singapore lowers export forecast for 2020 on Covid-19, oil price fears

SINGAPORE has cut its export forecasts for 2020, no thanks to the impact of the novel coronavirus outbreak on key trade partners, as well as the drag from lower oil prices.

Year-on-year change in non-oil domestic exports (NODX) is expected to range between a 0.5 per cent drop and a 1.5 per cent rise this year, trade agency Enterprise Singapore (ESG) said on Monday, down from its earlier projection of zero to 2 per cent growth.

The latest downgrade comes even as NODX clocked a slower pace of decline in Q4 2019 - easing to 5.7 per cent, from a fall of 9.6 per cent in the three months prior - on slightly gentler drops in both electronics and non-electronics shipments.

On a seasonally adjusted quarter on quarter (q-o-q) basis, NODX ticked up by 0.7 per cent in Q4 2019 - a tad slower than the 1.3 per cent growth in Q3 2019 - with a lift from electronic shipments reversing the previous quarter's decline to improve by 0.8 per cent on a seasonally adjusted q-o-q basis.

But ESG's earlier growth forecast in November 2019 had been "premised on a modest pickup in global growth, along with a recovery in the global electronics cycle in 2020", the agency noted on Monday.

"Since then, the Covid-19 outbreak has affected China - our top trade partner, Singapore and many countries globally. This may dampen the growth prospects of affected countries, if China's growth comes in lower than earlier expected, with a knock-on impact on regional economies, through lower import demand, as well as supply chain disruptions and weakened consumer and business sentiments.

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"In addition, lower oil prices are expected to weigh on our oil trade in nominal terms and in turn total trade in 2020," ESG added, pointing to international projections of weaker global energy demand in Q1 2020, partly because of the virus outbreak.

Exports to almost all of Singapore's top 10 markets were down in 2019, with the exception of the United States, according to ESG data.

The biggest contributors to the fall were Japan, with NODX plunging by 28.6 per cent; the European Union, down by 11.4 per cent; and Hong Kong, down by 16.6 per cent. Exports to mainland China were lower by 1 per cent for the full year.

Overall, Singapore's NODX lost 9.2 per cent in 2019, in line with preliminary data - down sharply from 4.2 per cent expansion in 2018 - in its worst full-year showing since 2009.

"The decline in NODX of pharmaceuticals and petrochemicals in 2019 came after recent strong growth to reach their respective six-year and four-year highs in 2018," ESG said, noting that pharmaceuticals grew by 24 per cent in 2018, while petrochemicals were up by 2.8 per cent in 2018 after double-digit gains the year before.

Total merchandise trade slipped by 3.2 per cent to reach S$1 trillion, dragged down by a 13.9 per cent decrease in the oil segment on the back of lower prices.

Meanwhile, total services trade inched up by 1.3 per cent to S$550.9 billion, easing from the double-digit growth of 12.5 per cent clocked in 2018.

Separately, the Ministry of Trade and Industry on Monday trimmed its gross domestic product outlook for 2020 to year-on-year growth of between -0.5 per cent and 1.5 per cent, with the figure tipped to fall around the mid-point of 0.5 per cent.