UPDATE 2-Singapore Feb exports plunge, but electronics improve
By Kevin Lim SINGAPORE, March 18 (Reuters) - Singapore's exports plunged far more than expected in February from a year earlier, hurt by a sharp drop in pharmaceuticals and oil rigs, according to official data released on Monday which showed the island state sharply underperforming trading rivals. A turnaround is in sight, however, as trade agency International Enterprises Singapore (IE Singapore) said that electronic exports rose month-on-month after adjusting for seasonal factors such as the Lunar New Year holiday that took place in February this year. After combining January and February exports to smoothe out the effect of the Lunar New Year holidays, Dutch bank ING estimated that in U.S. dollar terms, Singapore's 2013 exports fell 14.1 percent from the same two months a year ago, faring far worse than countries such as China, South Korea and Taiwan which reported year-on-year expansion in shipments. "We are reviewing our 3.4 percent year-on-year first quarter 2013 growth forecast for downward revision and we expect the consensus forecast of 4.0 percent to be revised lower," ING said in a note to clients. However, Citigroup economist Kit Wei Zheng said that after stripping out pharmaceuticals and oil platforms, which can vary sharply from month to month, Singapore's January and February exports were around 8 percent higher than the fourth quarter 2012 levels. Singapore, a base for companies such as Flextronics International and STATS ChipPAC, has lagged the recovery in Asia's technology sector as its electronics manufacturers are less exposed to the booming market for smart phones and tablets. The improving trend in electronics exports could be maintained through coming months, given the recovery in North Asia where semiconductor plants were running near full capacity, said Barclays economist Leong Wai Ho. The Singapore dollar fell after the release of the trade figures, but most commentators attributed the decline to the U.S. dollar's strength against other currencies. The Singapore dollar, which is pegged to a basket of currencies, tends to weaken against the greenback when the U.S. currency rises against the euro and yen. Credit Suisse estimates the Singapore dollar is near the top of its currency band despite its 2.4 percent decline versus the U.S. dollar so far this year. Singapore manages monetary policy by letting its dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band. The Monetary Authority of Singapore's current stance is to allow a modest and gradual appreciation of the Singapore dollar. "We maintain our view that the central bank will keep its current pace of appreciation and width of the exchange rate band unchanged in its next meeting in April," Credit Suisse economist Michael Wan said. Singapore's non-oil domestic exports (NODX) fell 30.6 percent last month from a year ago as exports of electronics dropped 27.4 percent and shipments of pharmaceuticals declined 56.5 percent. Export of ships and boats, a category that includes offshore oil rigs, fell 99.4 percent in February from a year ago. The sharp drop in NODX followed a subdued January when shipments grew by just 0.4 percent year-on-year, although the 2012 Lunar New Year did fall in that month last year. Factories in the city-state tend to shut for as long as a week during the Lunar New Year holidays. On a seasonally adjusted month-on-month basis, NODX shrank 2.4 percent as the growth in electronics was offset by the contraction in other export categories, IE Singapore said. Economists polled by Reuters had expected exports to fall 16 percent year-on-year, but rise 4.5 percent month-on-month after seasonal adjustments. The Economic Development Board (EDB), Singapore's main development agency, remains bullish about electronics despite weak export and industrial production data in recent months. Companies such as Globalfoundries and Hoya upgraded or expanded their operations in Singapore in 2012, and industry has spare capacity to quickly boost production and ride on the global economic recovery when it happens, EDB's deputy director for electronics Terence Gan told Reuters in a recent interview.