Singapore’s non-oil domestic exports recorded their biggest decline in a decade, plummeting by 25% YoY in January. The downturn was mainly led by the nation’s top markets, including China, the US, and Hong Kong.
Non-oil retained exports also fell by 10.4% in the same month, marking the fourth consecutive contraction, and the worst drop since February 2013. The Singapore dollar weakened slightly after the release, and the Straits Times index traded marginally higher.
The disappointing trade data was released days after Singapore’s latest budget for the year, in which the finance minister struggled to balance inflation and fiscal prudence.
Oxford Economics senior economist Alex Holmes described the trade data as alarming and predicted that the worst is yet to come for Singapore’s export sector. The firm expects a global recession in the first half of the year, which will further impact Singapore’s trade outlook.
It expects Singapore’s economy to grow marginally by 0.7% in the full year, with tumbling export earnings likely to stall business investment and employment growth.
Holmes also noted that the value of domestically produced chip exports has fallen below levels seen earlier in the pandemic, and the “turn in the semiconductor cycle” is still hurting exports.
The weakness of trade is a key reason why Oxford Economics expects GDP growth to be near the bottom of the government’s 0.5%-2.5% forecast in 2023.