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Singapore key exports tumble 14.7pc in May, raising recession risk

THE STRAITS TIMES – Singapore’s key exports fell for the eighth straight month in May and at a steeper rate, raising the risk of a technical recession.

Non-oil domestic exports (Nodx) shrank 14.7 per cent year on year in May, after a 9.8 per cent contraction in April, data from Enterprise Singapore (EnterpriseSG) showed on Friday.

The result was much worse than the 7.7 per cent fall expected by economists in a Bloomberg poll.

In real terms after adjusting for inflation, Nodx decreased by 7.6 per cent, following the 3.1 per cent fall in April, EnterpriseSG said.

Maybank economist Chua Hak Bin said “the export slump is worsening and Singapore is now at greater risk of a technical recession”.

A technical recession is when an economy contracts for two consecutive quarters.

Singapore’s economy shrank 0.4 per cent on a quarter-on-quarter basis in the first quarter of 2023.

The drop was much worse than the 7.7 per cent fall expected by economists in a Bloomberg poll. PHOTO: THE STRAITS TIMES

DBS Bank economist Chua Han Teng pointed to the difficult global external environment faced by exports and the manufacturing sector, particularly for electronics.

He said the latest numbers show that Singapore’s electronics exports slump has yet to reach bottom.

Electronics shipments were the biggest drag on May’s Nodx, tumbling 27.2 per cent year on year in May, a sharper contraction than the 23.3 per cent plunge in April.

Integrated circuits, disk media products and parts of integrated circuits contributed the most to the decline, with the last segment seeing the sharpest fall of 48.7 per cent.

“The near-term outlook for electronics exports remains uncertain, given that inventory destocking, for example in the global semiconductor market, is still ongoing,” Chua said.

However, he said artificial intelligence (AI) will drive demand for chips used to power AI systems, and this will present opportunities for the electronics sector in the medium term.

Non-electronics Nodx shrank by 10.7 per cent, following the 5.8 per cent fall in April. The decline was led by specialised machinery, petrochemicals and pharmaceuticals.

Shipments of pharmaceutical products fell 14 per cent in May compared with the same month in 2022.

On a seasonally adjusted month-on-month basis, Nodx contracted by 14.6 per cent in May to USD13.8 billion, reversing from 2.6 per cent growth in April.

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