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UPDATE 2-Singapore Feb exports plunge, but electronics improve
March 18, 2013 / 6:40 AM / 5 years ago

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.

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