SINGAPORE (AFP) – A plunge in exports and the worst growth rates for a decade have fuelled concerns about the outlook for Singapore’s economy, with analysts saying the figures offer a warning that Asia is heading for a slowdown as China-US tensions bite.
While it may be one of the smallest countries in the world, the export hub is highly sensitive to external shocks and has long been viewed as a barometer of the global demand for goods and services.
The affluent city-state is highly dependent on trade and has traditionally been one of the first places in Asia to be hit during global downturns – with ripples typically spreading out across the region.
The latest signs are not good. In June exports collapsed 17.3 per cent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.
That followed a shock 3.4 per cent quarter-on-quarter contraction in GDP in the second quarter. Year-on-year growth came in at just 0.1 per cent, the slowest pace since 2009 during the global financial crisis.
“Singapore is the canary in the coal mine,” Regional Economist with CIMB Private Banking Song Seng Wun told AFP. “And what it tells us is that it is a tough environment.”
To warn of danger, miners used to bring caged canaries underground with them as the birds would die in the presence of even a small amount of poisonous gas – signalling to workers that they should make a swift exit.
While steadily weakening growth in China is partly to blame for a slowdown in exports, analysts say the trade war between the United States (US) and China, the world’s two biggest economies, has dramatically worsened the situation.
Beijing and Washington have slapped each other with punitive tariffs covering more than USD360 billion in two-way trade.
While Singapore – a transit point for products heading to and from Western markets as well as the Asian base for manufacturers of some hi-tech goods – may be showing the strain most, negative data has emerged throughout the region.
Exports have been slipping across Asia. In India they plummeted 9.7 per cent in June, in Indonesia, Southeast Asia’s biggest economy, they dropped 8.9 per cent in the same month while in South Korea they slipped 10.7 per cent in May.