Singapore’s NODX likely to have contracted again in July

Singapore’s non-oil domestic exports (NODX) data, which is due to be released on Wednesday, is expected to disappoint again. The NODX is likely to have shrunk 2.7 percent year-on-year in July, said DBS Bank in a research note. Even if the 2.7 percent contraction is seen as a rebound from the 12.9 percent contraction in June, the NODX continues to remain in negative and highlights the tough economic conditions in the external environment.

In June, Singapore had recorded widespread drops in electronics and non-electronics. Moreover, the performance of NODX has been weighed on by China, which is Singapore’s biggest export market. Sales to China had dropped 9.9 percent on an annual basis in June. This phenomenon has been continuing since mid-2015 and it underlines the impacts of China’s slowdown on Singapore. According to DBS, the subdued performance of NODX is likely to continue for some time with the slowdown in China being a structural one.

The prospects of Singaporean economy are weak given the sub-par export performance, along with the continuous weakness in loan growth, industrial production figure, PMIs and the downward revision of the country’s second quarter GDP growth to 0.3 percent quarter-on-quarter and 2.1 percent year-on-year. Key services are already in a technical recession, noted DBS.

“If exports fall further and drag the manufacturing sector down, then a quarterly contraction in GDP could be on the cards,” added DBS.