Singapore lowers 2020 forecast for exports on coronavirus, weaker oil prices

SINGAPORE – Singapore has cut its forecasts for non-oil domestic exports (Nodx) and total merchandise trade for 2020 after weighing the likely impact of the coronavirus outbreak on its trading partners and lower oil prices.

Nodx is now expected to come in between -0.5 per cent to 1.5 per cent this year, trade agency Enterprise Singapore (ESG) said on Monday (Feb 17), a downgrade of its earlier projection of zero to 2 per cent growth.

ESG also revised its forecast for total merchandise this year to the same new range as Nodx.

It noted that its earlier predictions for trade made in November 2019 had been “premised on a modest pickup in global growth, along with a recovery in the global electronics cycle in 2020”.

Then came the coronavirus outbreak (Covid-19), with the epidemic spreading from China, Singapore’s largest trading partner, to 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,” ESG said.

The trade agency said also that lower oil prices are expected to weigh on Singapore’s oil trade in in 2020. The Energy Information Administration projected weakened global demand in the first quarter of 2020, in part reflecting the effects of the Covid-19, compared to the previous update.

Ahead of the virus outbreak fallout, Nodx saw a slower pace of decline of 5.7 per cent in the fourth quarter of last year, from a 9.6 per cent fall in the previous quarter on smaller drops in both electronics and non-electronics shipments.

Electronic exports contracted by 20.4 per cent between October and December last year, slightly less than the previous quarter’s 25 per cent decline.

Nodx of non-electronics declined slightly by 0.3 per cent in between October and December last year, easing from the 3.9 per cent decline in the previous quarter.

On a quarter-on-quarter seasonally adjusted basis, Nodx increased by 0.7 per cent between October and December, following the 1.3 per cent growth in the previous quarter due to the growth in both electronics and non-electronics Nodx.

ESG also announced that Nodx dropped by 9.2 per cent last year, unchanged from an advance estimate. This is the worst performance since 2009 and is sharply down from 4.2 per cent growth in 2018.

Shipments of electronics slipped 22.5 per cent last year, following the 5.5 per cent drop in 2018.

Exports of non-electronics declined by 4.5 per cent last year after it grew 8.2 per cent in 2018.

Exports to almost all of Singapore’s top 10 markets were down in 2019, except for US. The biggest contributors to the fall were Japan (-28.6 per cent), the European Union (-11.4 per cent) and Hong Kong (16.6 per cent). Shipments to mainland China – Singapore’s single biggest export market – dipped 1 per cent in 2019.

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