17 Jul 07
Singapore’s government on Tuesday cuts its 2007 trade forecast, citing slower-than-expected exports growth in the first half of the year and the likelihood of sustained weakness in key electronics exports.
The country’s trade agency said in a statement on Tuesday that it expected total trade to grow by 5-7 percent this year, compared with its previous forecast of 8-10 percent.
The move comes after Singapore’s non-oil exports rose less than expected in June, climbing a seasonally adjusted 2.9 percent from May, versus market expectations of a 6.2 percent rise and after a 1.4 percent increase in May.
“The main culprit was electronics which was sluggish through June, it’s been weighed down by disk drive production shifting to other cities. But the Singapore economy is quite healthy and the strength elsewhere will be able to balance weakness in that sector,” said David Cohen at Action Economics.
June’s electronics shipments, which account for about half of the trade-dependent city-state’s non-oil exports, fell for the fifth month in a row, down 13 percent from a year ago.
The slump was somewhat cushioned by pharmaceuticals, which make up about 10 percent of foreign sales, up 34 percent in the same period. Petrochemicals climbed 10.7 percent.
Song Seng Wun, an economist at CIMB, said Singapore’s economy was still likely to surprise on the upside this year despite the soft trade numbers.
“A 5-7 percent growth forecast for trade is a realistic projection. We are still optimistic that the second half will be better, given tech inventory levels and that guidance from companies is positive.”
Non-oil exports in June rose 1.2 percent from a year earlier to S$14.3 billion ($9.4 billion), trade agency International Enterprise Singapore said. That compared with a 3.7 percent rise in May, and with a median forecast in a Reuters poll of an annual increase of 5.6 percent.
Singapore’s non-oil domestic exports, which comprise goods that have been manufactured in Singapore or undergone further processing, include mobile phones, medical instruments and active ingredients for some blockbuster drugs.