Not entirely, analysts say.
Manufacturers are hoping that the depreciating Singapore dollar will jolt the city-state’s exports back to life. but analysts caution that currency weakness alone will not be enough to rescue Singapore’s exports.
Although the weak Singapore dollar will make the city-state’s products cheaper and more attractive to buyers, the bigger question is whether or not demand will pick up, said a note by UOB.
“We think that the more important factor for 2016 is not how much cheaper Singapore exports can get due to FX effects, but whether the final demand conditions particularly coming from the G3 and China will pick up,” said UOB.
And if the December non-oil domestic exports (NODX) figures is anything to go by, then there’s a slim chance that Singapore exports will bounce back materially this year.
The drag on NODX was mainly due to the staggering 10.3% year-on-year decline in non-electronic exports in December, along with an 18.7% year-on-year decline in exports to China.
“From the December data, the heightened concerns about China will remain in the near term. We had initially forecast 2016 NODX growth at 2.1%, from -1% in 2015, but even at such conservative expectations, we fear that the risk to outlook still tilts towards the downside, especially in light of the China growth uncertainty & the decline in crude oil prices,” said UOB.
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