The export market of Singapore faced an unexpected decline in May 2008 when it fell to 9.8% owing to weakening global demand and rising inflation.
According to International Enterprise Singapore, a leading trade agency, post seasonal adjustment, non-oil exports from Singapore fell unexpectedly in May 2008 to 9.8%, the sharpest decline since January 2006. This has added to the concerns regarding global demand though the Asian scenario is mixed, as reported by BusinessSpectator.
International Enterprise Singapore revealed that the shipments declined by 10.5% against the corresponding month last year to Singaporean $12.4 Billion (US$ 9.6 Billion). While the drug exports fell by 48.5% against the May 2007 baseline, electronic shipments came down by 7.3% against the previous month (April 2008). Also, the exports to Europe dove by 28% in May 2008, the biggest fall since November 2007 and the shipments to the US plunged by 22%.
The industry experts believe that the weak global demand for consumer products and poor monetary policies of the Central Bank has raised the Singapore dollar, which is the primary reason for the downfall. The exchange rate policy of the Monetary Authority of Singapore (MAS) is likely to harm the exports most. This comes at a time when Singapore is already struggling with inflationary pressures due to costlier food and fuel.
Further, throughput from the drug factories is highly volatile due to change in production cycles when drug makers shift to new drug to speed up the process of drug launch to the market, simultaneously ensuring GMP right from the raw material to finished good. Also, the credit crunch across the globe is impacting the demand of Singaporean export products.
Chua Hak Bin, Chief Asian Strategist at Deutsche Bank in Singapore, said that the declining demand, coupled with slow economic growth, is likely to take a toll on the annual GDP of Singapore that is likely to stand at 5% in the second quarter (April-June 2008) against the appreciable 6.7% during the first quarter, as reported by BusinessSpectator.
According to a Research Analyst at RNCOS, “Poor global demand and rising inflation are reducing the demand for Singaporean products. Therefore, the authorities have to undertake administrative and fiscal measures to curb inflation. Besides, the improved marketing strategies will help in compensating for the decline in exports.”
