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By Kevin Lim
SINGAPORE, April 17 (Reuters) - Singapore's non-oil domestic exports fell unexpectedly in March as a recovery in electronics and a strong showing by pharmaceuticals were weighed down by a 99 percent drop in ship and oil rig sales that tend to vary sharply from month to month.
Another surprise was a year-on-year dip in the city-state's exports to China even as shipments to Europe and the United States rose, highlighting the risk a slowing Chinese economy could have on the rest of Asia.
"The drop in exports to China, coupled with recent Chinese trade numbers, show the key risk to Asian growth is China. The U.S. and Europe have already been factored in," said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp, Southeast Asia's second-largest lender by assets.
Wealthy Singapore, a major Asian business and financial centre with trade three times the size of its economy, is widely seen as a barometer for Asian economies.
Non-oil domestic exports fell 4.3 percent in March from a year earlier, even as electronics shipments rose 2.8 percent year-on-year and pharmaceuticals soared 43 percent.
On a seasonally adjusted basis, non-oil domestic exports fell 16.8 percent from February.
Economists polled by Reuters had expected exports to fall a seasonally adjusted 8.3 percent month-on-month but expand 6.3 percent year-on-year.
While exports to Europe, the United States and Japan rose, shipments to China fell 0.9 percent from a year earlier due to a decline in semiconductor components, petrochemicals and food preparations, trade agency International Enterprises Singapore said in a statement.
TABLE-March non-oil exports
GRAPHIC-S'pore exports/dollar link.reuters.com/syh27s
POLL-Economists' expectations for exports
S'pore ups inflation outlook, tightens policy
S'pore PMI: manufacturing grew again in March
China reported a lower-than-expected 5.3 percent rise in imports for March as its trade balance returned to surplus.
Beijing also said the economy grew at its slowest pace in nearly three years in the first quarter, raising concerns of softness in the world's second-largest economy.
MANUFACTURING ON THE MEND
Most economists viewed the Singapore trade data positively, noting the continued recovery in electronics.
Singapore's manufacturing sector expanded for a second consecutive month in March, signaling the worst may be over as new export orders and production edged higher, the latest Purchasing Manager's Index showed.
Despite the sharp drop in exports of ship structures, a category that includes oil rigs, the city-state's rig builders enjoy strong order books with deliveries extending into 2015.
Singapore's Keppel Corp, the world's largest oil rig builder, last week signed a letter of intent to build five semi-submersible rigs for Sete Brasil for around $4.12 billion.
CIMB regional economist Song Seng Wun estimated Singapore's non-oil domestic exports grew by around 4 percent in March from a year earlier if items such as oil rigs were excluded.
But Robert Prior-Wandesforde, of Credit Suisse, said the Singapore data would provide ammunition to those fearing a renewed slowdown in the global trade cycle was underway.
"This is certainly possible, but we would caution that at least part of the weakness looks to be pay-back from what was an extraordinary period of strength in Singapore exports towards the end of last year and in early 2011."
Singapore said last week its economy grew at an annualised and seasonally adjusted 9.9 percent quarter-on-quarter pace in January to March, beating economists' forecasts and avoiding a technical recession. (Reporting by Kevin Lim; Editing by John O'Callaghan and Eric Meijer.)