According to official data released on Friday (17 Jan), following nine months of contraction, Singapore’s exports made an unexpected rebound in December last year.
Economists have pointed out that the contraction in electronic exports yet continues and it remains to be seen if this recovery is a one-off event or that it is sustainable.
Data from the trade agency Enterprise Singapore showed that December’s year-on-year non-oil domestic exports increased by 2.4 per cent after the 5.9 per cent fall in November last year. This figure was above the forecast done by economists in a Reuters poll at 1.8 per cent decline.
The increase in pharmaceutical shipments by 34.7 per cent on-year contributed to December’s increase in non-oil domestic exports. This is despite the decline in electronics export by 21.3 per cent and 23.3 per cent in December and November respectively.
Sanjay Mathur, the chief economist for Southeast Asia at ANZ, an Australian multinational banking and financial services company headquartered in Melbourne, Australia, said that “It is imperative for a sustained improvement in exports that the electronics sector rebounds… Pharma will continue to be volatile and it is not an issue that is related to the business cycle per se. What is related to the business cycle is the electronics sector.”
Last year, the Singapore economy grew at its slowest pace ever in 10 years. This can be attributed to the lingering cyclical contraction in the electronic sectors as well as the ongoing US-China trade tension which has adverse effects on the trading activities of the country.
Due to the growing demand in the smartphone market, some chipmakers expect the industry downturn to not prolong and be on the path to recovery soon.
Exports also increased by 5.8 per cent in November followed by a 1.1 per cent expansion in December on a seasonally adjusted month-on-month basis. Based on the poll, December’s export increase was forecasted at 1.3 per cent.
The export rebound in December last year was also assisted by the shipments of non-monetary gold, which increased by 127.8 per cent from the year before.
Singapore is a big trader in the gold trade industry in the region. This means that exports is susceptible to the high volatile changes in value.
According to the data from Refinitiv, the global provider of financial markets data and infrastructure, spot gold has in recent weeks climbed up to some of the highest levels ever recorded since 2013.