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ECONOMY | Krisana Gallezo-Estaura, Singapore
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What does it mean for Singapore that exports have fallen far worse than expected?

Worst combination possible blamed for 30.6% plunge  .

NODX in Feb 2013 plunged by 30.6% YoY from a menial 0.4% YoY growth the previous month.

MayBanK analyst Suhaimi Ilias explains that the drop, which was weighed down by drugs, could be attributed to Lunar New Year holidays which trimmed trade activities throughout much of the region and the high base last year (Feb 2012: +30.2% YoYexacerbated the decline.


Shipments of Pharmaceuticals contracted by - 56.5% YoY, the third month of double-digit declines.

CIMB analyst Song Seng Wun meanwhile adds that the main drag came from the worst combination possible: fewer working days because of Lunar New Year that exaggerated declines for oth pharmaceuticals and tech compounded by an absence of lumpy items.

Here’s how analysts see growth prospects for exports in the coming months:

Suhaimi Ilias, analyst, MayBank KimEng Singapore

EU and US were the main drags on NODX as shipments to both markets fell by the same quantum of -52% YoY. Major Asian destinations such as Japan, China, HK and ASEAN for NODX were also down by between -10% YoY to -40% YoY, except India (Feb 2013: +13.0% YoY; Jan 2013: +7.4% YoY) and Taiwan (Feb 2013: +5.8% YoY; Jan 2013: +25.5% YoY).

Expect volatile NODX in 1Q 2013. Singapore’s Purchasing Managers Index (PMI) readings for Feb 2013 dipped back to below 50 (49.2; Jan 2013: 50.2) but the silver lining came from the subcomponent for New Export Orders for Electronics which gained further traction as it rose for the second consecutive month to 53.2 (Jan 2013: 50.4) suggesting the prospect of an upcoming electronics-driven improvement in NODX.

Meanwhile, global manufacturing PMI readings for Feb 2013 in the meantime remained in expansionary mode for a third consecutive month coming in at 50.8 (Jan 2013: 51.4), underpinned essentially by key non-Eurozone trading economies such as US, China, Germany, India, Brazil, South Korea and Taiwan.

Song Seng Wun, analyst, CIMB

A more favourable base with an absence of lumpy items last Mar should help to restore this Mar’s NODX. Still, sharp yoy swings in NODX are likely to persist into 2Q13.

For 2013, we expect NODX to recover to 3-5% growth despite its poor opening salvo. We expect Feb 13 to be the trough for Singapore NODX. Advanced economies, although still mired in sub-par growth, are no longer in crisis mode, although the current banking crisis in Cyprus throws a timely reminder that Europe is still a long way from “normality”.

Upside could come from Tuas again, courtesy of its pharmaceutical facilities and shipyards. Tech DX may remain sluggish in 1H13 since roughly50% of Singapore’s tech DX (disk-media products and chips) is PC-centric. We are keeping our fingers crossed that the perceived improvement in the global economy and new product launches in 2H13 will help to revive demand for tech parts/components for PCs and laptops.

Given this, coupled with an undemanding base, we expect NODX to fare slightly better in 2013.

Euben Paracuelles, analyst, Nomura

Our view has been that NODX will be volatile but we were still surprised by how extreme and broad-based the decline in February was. There is still a case to expect some pickup in the near term as base effects fade, pharmaceuticals swing the other way, and oil rig shipments come through. However, the underlying improvement we forecast in H2 is increasingly under threat.

Taking the latest data into account, our monthly GDP tracker suggests very weak growth of -3.0% y-o-y for Q1 so far (versus +1.2% in the previous quarter). Unless there is a sharp rebound in the March indicators, the risk is that this could put more pressure on the authorities to provide some form of short-term support and ease policy, which puts the spotlight back on the next MAS policy announcement in April.
 

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