Singapore's exports in July tumbled as sales to China and the United States declined in a renewed sign of Asia's struggles as its exports engine sputters amid weak external demand, and keeping pressure on policy makers to deliver more stimulus. Exports across Asia - a key pillar of economic growth - including power houses such as China and South Korea slumped more than expected in July as global demand showed no signs of a recovery with Britain's exit of the European Union hurting prospects further.
Singapore's non-oil domestic exports (NODX) fell 10.6 percent last month from a year earlier, the trade agency International Enterprise Singapore said on Wednesday. That was far worse than the median forecast of a 2.5 percent slump in a Reuters poll and a revised 2.4 percent loss in June.
"This would suggest to me that the cycle in Asia itself, especially the external cycle, is starting to slow and this should be concerning for both the asset market and for officials," said Vaninder Singh, an economist at RBS in Singapore, referring to disappointing exports data across Asia.
Central banks in the region, including South Korea, Taiwan and Malaysia, have already cut interest rates in recent months, and analysts see more cuts in the months ahead. Australia and New Zealand both cut rates earlier this month as authorities try to revive demand in a world grappling with weak consumption.
Singapore's own weak trade numbers will put the focus back on the central bank after its surprise easing in April when it set the rate of appreciation of the Singapore dollar's policy band at zero percent.
Some analysts see prospects of further easing at its October meeting to restore momentum, but Monetary Authority of Singapore deputy managing director Jacqueline Loh last week said the current monetary policy stance remains appropriate for 2016 even as the government cut its economic growth forecast.
"External conditions still look very tepid in terms of demand," said Edward Lee, head of ASEAN Economic Research at Standard Chartered Bank, although he believes the hurdle for another easing by MAS soon after April remains high for now.
RBS' Singh said MAS may ease again in April next year or even deliver an off-cycle move in January if things get much worse.
"The NODX is not just being affected by cyclical factors ..., but also structural factors, which is that Singapore's manufacturing sector is in a secular decline as the economy moves away from older sources of growth and towards newer sources of growth," he said.
The trade-dependent economy is now expected to grow 1-2 percent this year, lower than the previous government forecast of 1-3 percent.
Exports to China, Singapore's top overseas market, fell 16.6 percent in July from a year earlier, much more than a 9.9 percent decline in June.
That came against the backdrop of a slowdown in China, with activity in July showing an underpowered economy.
Shipments to the United States slumped 19.1 percent last month on-year, compared to a 5.9 percent increase in June.
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