Technical recession is creeping closer to Singapore economy

Manufacturing would suffer the 4.2% dip in NODX.

According to CIMB, non-tech DX (67% of NODX) declined 14.8% yoy, the worst in nearly four years, on the back of a 5.5% fall in chemicals (-12% fall in drugs) and a 98% yoy plunge in “structure of ships & boats.”

For the full-year, non-tech DX expanded 3.0% (11.7% in 2011).

Drugs and lumpy items did not do what they had to do. It’s a familiar story, but with a stronger sting: poor non-tech export growth was compounded by weaker tech, causing Dec’s NODX to retreat a sharper-than-expected 16.3% yoy (consensus: -7.6% yoy).

There was no reprieve from tech again (33% of NODX). Tech DX declined 19.1% yoy in Dec, the worst in over a year, pulling 2012 tech DX down to -4.1% (2011: -11.6%).

All key segments declined last month, led by weaker exports of semiconductors (-23.4% in Dec and -1.5% in 2012) and disk-media products (-27.3% and -0.8%).

Here's more from CIMB:

The fifth straight month of yoy declines in chip exports this year is a cause for concern as chips are among Singapore’s top manufactured exports.

The segment accounted for 42% of 2012 Tech DX and 14% of NODX, ahead of pharmaceutical exports (13%).

Technical recession risk increases. The worse-than-expected 4Q12 NODX decline of 4.2% yoy (-3.2% in 3Q12) would weigh on 4Q12 manufacturing, which, two weeks ago, was estimated by MTI to contract 1.5% yoy (-1.6% in 3Q12).

A downward revision in 4Q12 industrial production (IP) could lead to a similar downward revision on 4Q12 GDP, which would rekindle the risk of a technical recession.

Dec IP is slated for release on 25 January next week. Watch this space.

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