US-China trade war hits Singapore exports as city state posts first annual decline in eight months

Singapore’s exports fell for the first time in eight months on a year on year basis in November with shipments to China, its biggest market, continuing their decline on slowing growth in the world’s second largest economy.

The contraction comes as economists grow increasingly worried about the impact of US trade war tensions on demand from China, with many expecting the dispute to hurt the city state’s trade dependent economy in months to come.

Singapore’s non-oil domestic exports fell 2.6 per cent in November year-on-year, a sharp contrast to the 1.2 per cent increase predicted by economists in a Reuters poll, according to the data from trade agency Enterprise Singapore on Monday.

It was also sharply down from the revised 8.2 per cent rise the month before and the first negative reading since March.

The decline in the headline export number comes on top of a more established weakening trend in trade with China, while growth in shipments in the volatile pharmaceuticals sector also slowed significantly.

China economy weaker in November as effect of trade war sets in

“While domestic exports to the US remained healthy, shipments to China continued to weigh on overall growth,” Sian Fenner, an economist at Oxford Economics said in a research note to clients.

“Notwithstanding the recent truce in the US-China trade war, we think weaker Chinese import demand, amid increased trade protectionism, will increasingly weigh on exports and Singapore [gross domestic product] growth over 2019.”

Trade to China, which has been in decline for most of this year, fell for the fourth consecutive month in November, down 16 percent from a year earlier, compared with the previous month’s 25.8 per cent decline.

“China growth has moderated, and that’s the primary reason (for the declining exports to China),” CIMB economist Song Seng Wun said.

“If you look at retail sales, it’s quite indicative that Chinese macro fundamentals have weakened.”

China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as the economy lost further momentum, heaping pressure on Beijing to defuse its trade dispute with the United States.