Nov. 17 (Bloomberg) -- Singapore’s exports failed to recover as strongly as expected in October, giving policy makers a reason to be wary about exiting stimulus measures too soon.
Non-oil domestic exports dropped 6.1 percent from a year earlier, after a revised 7.3 percent contraction in September, the trade promotion agency said in a statement today. The median forecast of 10 economists surveyed by Bloomberg News was for a 0.2 percent gain.
The improvement in exports “has been gradual so far,” Brian Jackson, a senior strategist for emerging markets at the Royal Bank of Canada in Hong Kong, said in an e-mail. “This suggests that Singapore authorities will be cautious about the outlook for recovery and will want to keep a lid on currency appreciation against the dollar.”
The central bank said last month it will maintain a zero appreciation stance in its currency policy, after opting for a de-facto devaluation of the Singapore dollar in April to help reverse a collapse in exports. The global recovery “remains fragile” and growth in the coming quarters may be uneven, Asia- Pacific Economic Cooperation ministers said last week.
Singapore’s benchmark stock index fell 0.4 percent as at 2:19 p.m. today. The island’s currency was little changed at 1.3858 against the U.S. dollar.
Not All ‘Rosy’
“It is beginning to look as though not everything in Singapore’s garden is rosy right now,” Robert Prior-Wandesforde, a Singapore-based senior economist at HSBC Holdings Plc., said in an e-mail. “It’s most likely to prove a pause for breath after what has been an extremely rapid period of growth but clearly the situation needs watching closely.”
Singapore’s stock index has surged 57 percent this year as a global economic recovery increases sales at companies including Chartered Semiconductor Manufacturing Ltd. Improving exports are needed to sustain Asia’s emergence from the world recession after the region’s governments pumped more than $950 billion into their economies and cut interest rates to revive growth.
Japan’s economy expanded at the fastest pace in more than two years in the third quarter, led by a rebound in domestic demand, a report showed yesterday. The annual 4.8 percent increase in gross domestic product was the second straight advance after the nation’s deepest postwar recession.
Growth Forecast
Singapore’s government has raised its 2009 economic forecast twice this year after cutting corporate taxes and unveiling record spending to revive growth. The island’s $182 billion economy grew 0.8 percent in the third quarter from a year earlier, the first expansion in more than a year, according to an advanced estimate last month.
The country may report a smaller 0.5 percent increase in third-quarter GDP from a year earlier when it releases final estimates on Nov. 19, according to the median forecast of eight economists surveyed by Bloomberg News.
“Our base case scenario of a gradual global demand recovery and benign inflation environment remains intact,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore.
Singapore’s non-oil exports fell a seasonally adjusted 12.6 percent last month from September, when they rose a revised 2.9 percent, today’s report showed.
Electronics shipments dropped 13.8 percent in October from a year earlier to S$4.85 billion ($3.5 billion), easing from a 14.4 percent decline in September. Non-electronics shipments, which include petrochemicals and pharmaceuticals, fell 0.5 percent in October after declining a revised 2.5 percent in September. Pharmaceutical shipments gained 24.8 percent.
The performance of Singapore’s pharmaceutical industry is volatile as production swings by companies such as Sanofi- Aventis SA can cause industrial output to fluctuate from month to month. Drug companies sometimes shut plants for cleaning before making different products.
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