(May 29): Signs of weakness in global economies and trading patterns have become more pronounced in April, with real merchandise exports in the Asian region dipping 5.5% in USD terms.
While this is a more modest decline from the 7.5% fall recorded in 1Q20 ended March, Oxford Economics’ lead economist Sian Fenner says this is temporary.
“We think this will be temporary, as the boost was due to exporters ramping up shipments to make up for the shortfalls caused by supply disruptions in Q1,” she points out in a May 29 note.
Fenner elaborates that the smaller decline follows a “surprising rebound” in China’s merchandise receipts by +3.5% in April, from the 6.6% contraction registered in March. This comes from an easing of lockdown measures that took off in end March.
Meanwhile, other countries that still have movement control restrictions are still experiencing contractions in goods receipts. India for one, recording a significant 60% plummet in March.
Japan followed suit with export volumes tumbling 18.2% in April as vehicle and machinery equipment shipments were affected by the disruptions in global supply chains.
Singapore’s export-oriented economy has not been spared. The city-state’s electronic shipments have taken a hit, albeit a smidgen 0.6% contraction in April. Still, this saw the segment reversing into the red from a 5.8% growth recorded the month before.
The poorer performance follows a decline in the exports of PCs, diodes & transistors and disk drives by 44.3%, 13.2% and 32.9% respectively, Enterprise Singapore – a trade agency under the Ministry of Trade and Industry reported on May 18.
For now, the electronics non-oil domestic exports are getting a lift with record high shipments of pharmaceutical (+66.3%) and food preparations (+66.3%). Overall, the metric recorded a 9.7% growth in April.
See: Singapore's NODX continues to surprise with 9.7% growth in April
Even as the figures look promising, Fenner warns of a challenging outlook for exports in the near-term.
“While we expect manufacturing activity and external demand to pick up as global lockdowns are loosened, any rebound in activity is likely to be modest compared to the size of the fall in 2Q20,” she adds.
