SINGAPORE: Singapore’s exports in November unexpectedly jumped, thanks to a sharp rise in shipments of pharmaceuticals as well as overall increases in sales to the European Union and China, but analysts say it’s too early to call a turn for the stressed trade sector.
Non-oil domestic exports (NODX) rose 11.5 percent last month from a year earlier, the trade agency International Enterprise Singapore said in a statement on Friday, blowing past the 3.0 drop predicted by economists in a Reuters survey
While the data suggests the risk of the economy slipping into recession has diminished, the underlying picture is not very rosy, said Vishnu Varathan, senior economist for Mizuho Bank.
“The bigger picture is that I think exports remain quite subdued and correspondingly industrial production and in Singapore’s case, manufacturing, remains very weak,” he said.
The November exports got a boost from shipments of pharmaceuticals, which can swing sharply from month to month. Pharmaceuticals exports jumped 44.8 percent in November from a year earlier, after sliding 47.0 percent in October.
Support from a weaker Singapore dollar and a low-base comparison from a year earlier, also contributed to the strong exports, said Trinh Nguyen, senior economist at French investment bank Natixis SA in Hong Kong.
“The big question is whether this signals a turnaround for Singapore’s exports and we think that it is too early to rejoice,” Nguyen said.
The Singapore dollar hit a seven-year low of 1.4481 per US dollar on Wednesday and stood at 1.4431 on Thursday.
That drop came after the US Federal Reserve raised interest rates and signaled a faster pace of rate increases in 2017, as policymakers prepared for to the incoming administration’s promises of tax cuts, fiscal spending and deregulation.
There is room for the Singapore dollar’s nominal effective exchange rate to move lower within the policy band set by the Monetary Authority of Singapore (MAS), Nguyen said.
“The MAS will keep the Singapore dollar competitive on a trade-weighted basis, which will help external sectors. Higher oil, too, will help. In other words, we think external sectors are bottoming but the rebound is unlikely a V-shaped recovery.”
The latest jump in exports followed a 12 percent year-on-year contraction in October, an outcome that some analysts saw as increasing the risk of a recession amid heightened uncertainty around global trade after Donald Trump’s US election victory.
Exports to the European Union in November rose 48.3 percent from a year earlier, after falling 28.6 percent in October.
Shipments to China increased 15.8 percent, after falling 0.1 percent in October, while exports to the United States rose 3.0 percent in November from a year earlier.
With Trump’s campaign promise to tear up international trade deals threatening to shatter a fragile global recovery, Singapore’s open economy remains among some of the most vulnerable markets to US protectionism.
Singapore’s economy has been on the ropes in the last two years as exports fell away amid slow world growth, and some analysts say a deteriorating growth outlook could force the central bank to ease at its next review in April 2017 after it kept its exchange-rate based policy unchanged in October.