Trade-reliant Singapore just took another big hit in the latest data, and the implications for the economy are looking serious.
Singapore’s non-oil domestic exports plunged in May by the most since February 2013, driven by an ongoing slump in the electronics sector that’s now the worst in more than a decade, Enterprise Singapore figures showed on Monday.
Both trade-war and electronics-sector stresses have continued to weigh on the city state, even after the typical Lunar New Year fluctuations in the data early in the year. The magnitude of Monday’s declines, in addition to their corroboration with other recent data, could signal a bigger hit to the city state’s economy.
Markets frowned on the data, with the Straits Times index opening 0.38 percent lower than Friday’s close and recovering to a 0.13 percent decline as of 10:58 a.m. in Singapore.
The slowdown in the electronics cycle, which was booming about two years ago, has for months been frustrating some of the world’s exports engines in Asia. A gauge of Singapore purchasing managers’ sentiment on electronics has been in contraction for seven straight months.
While more difficult to pin down, tensions from the US-China trade war have also filtered through to Southeast Asia.
Singapore’s shipments to China plunged 23.3% in May from a year earlier for the fourth drop in five months.
Some economies, including Vietnam and Malaysia, have benefited from a diversion of orders and production. Headline trade data in the region, however, have highlighted near-term losses. Container throughput in Singapore, one of the busiest ports in the world, showed a year-on-year drop last month. Singapore policy makers are already prepared for a step-down in economic growth this year, pegging a 1.5-2.5% range, which would be the worst annual performance since 2009. The economy expanded 3.2% last year.