SIGNAPORE (Oct 17): Singapore’s non-oil domestic exports (NODX) fell 8.1% year-on-year in September – marking the seventh consecutive month of contraction amid uncertainty surrounding the US-China trade war and slowing global growth.

For the first nine months of 2019, NODX has fallen 10.3% y-o-y lower than over the corresponding period last year.

The September decline was led by a 24.8% drop in electronic exports, which clocked 10 straight months of negative growth.

At the same time, non-electronic exports dipped 2.3% in September. The decline was mainly due to lower exports of jewellery, pharmaceuticals, and petrochemicals, which fell 52.0%, 26.7%, and 10.6%, respectively.

“The drivers responsible for the slowdown in Singapore’s trade environment remains unchanged: ongoing maturing of the global electronic cycle as well as the negative effects from the US-China trade tensions continuing to impact Singapore’s export environment,” says Barnabas Gan, an economist at UOB Group Research.

Meanwhile, non-oil re-exports (NORX) grew 3.0% y-o-y in September, reversing from three consecutive months of contraction between June and August.

Seen as an indication of the health of the wholesale trade sector, NORX growth was led by a 50.8% rise in re-exports to Taiwan, while the Malaysia and China markets grew 10.0% and 7.9% respectively.

“Some respite may be seen in the non-oil re-exports (NORX),” says Gan. “The growth was led by both electronic re-exports (+3.4%) and non-electronic re-exports (+2.7%).”

Sung Eun Jung, an economist at Oxford Economics, believes that Singapore’s export growth will remain sluggish for some time.

“The decline in goods export volumes moderated in September as re-exports growth turned positive again. However, the outlook for exports remains challenging with a significant policy uncertainty surrounding the US-China trade war and slowing global growth,” says Sung.

Sung expects Singapore’s real GDP to grow by 0.6% this year, before picking up 1.4% in 2020.

Against the backdrop of slowing export growth, the economist notes that Singapore’s central bank has eased its monetary policy, and adds that she expects some targeted fiscal measures in the 2020 budget.

The Monetary Authority of Singapore (MAS) in its bi-annual review on Monday had eased the monetary policy “slightly” – marking the first monetary policy easing in over three years.

MAS said it will be reducing the slope of the Singapore dollar nominal effective exchange rate (S$NEER), but will keep the width of the policy band and the level at which it is centred.

“We currently expect the slope of SG$NEER trading band to be around 0.5%,” says Sung.

The S$NEER, the trade-weighted basket of currencies against the Singapore dollar, has been a key policy tool for MAS.

See: MAS eases monetary policy 'slightly' for first time in 3 years

Speaking at a conference in Singapore hosted by Forbes on Wednesday, Prime Minister Lee Hsien Loong said Singapore’s economic growth momentum has “substantially diminished”.

“The trade disputes have cast a pall over the whole global economy – including the American economy,” Lee said. “What it means is it adds an additional layer of uncertainty, anxiety. It’s caused consumers to hold back, it’s caused investors to hold back. Trade volumes have come down, growth rates have come down. Our growth rate has come down.”

UOB’s Gan agrees that Singapore’s trade outlook remains hinged on the US-China trade developments.

“It seems too early to call for a turnaround in Singapore’s export doldrums,” Gan says. “We keep our NODX growth outlook at -8.5% y-o-y.