Singapore May exports in sharpest fall since Jan '06

SINGAPORE, June 17 - Singapore's May non-oil exports unexpectedly fell 9.8 percent after seasonal adjustments from April, the sharpest fall since January 2006, providing new evidence that a global slowdown may be weighing on Asian exports.

Annual shipments fell across its top 10 export markets except Indonesia and Taiwan, with Europe and the United States leading declines. Exports to Europe slumped 28 percent from a year ago, while shipments to the United States dropped 22 percent.

The May fall compared with market expectations for a 1.1 percent rise, and followed a 1.6 percent gain in April when shipments unexpectedly rose .

Economists said the surprise decline may be a sign that consumer demand was weakening as the global economy slows, and said sluggish exports could drag on the Singapore economy in the second quarter.

"It's a warning sign of possible slowing in demand," said David Cohen, an economist at Action Economics.

"But the fact is that data from elsewhere in the region China, South Korea and Taiwan would allow us to shrug it off as month-to-month volatility."

A slid in volatile drug shipments and further weakness in electronics exports dragged annual shipments down 10.5 percent to S$12.4 billion, trade agency International Enterprise Singapore said in a statement.

That compared with a revised 5.3 percent rise in April, and with a median forecast in a Reuters poll for an annual rise of 1.9 percent.

The Singapore economy is heavily dependent on trade, and non-oil domestic exports were worth about 70 percent of the city-state's gross domestic product last year.

Economists had expected monthly exports in May to rise slightly as higher petrochemical and drug shipments offset persistent weakness in electronic goods.

May's electronics shipments fell 8.5 percent from a year ago while drugs exports dropped 48.5 percent in the same period. Petrochemicals slipped 2.6 percent.

Singapore's non-oil domestic exports, which comprise of goods that have been manufactured in Singapore or undergone further processing, include mobile phones, medical instruments, and active ingredients for some blockbuster drugs.

Shipments from export-reliant Asia are expected to slow this year as a global credit crunch and a crisis-stricken U.S. housing sector take a toll on demand for the continent's output, although evidence of a slowdown has been mixed so far.

South Korea's exports hit a near four-year high in May, preliminary data showed, while Taiwan's May exports accelerated at a faster-than-expected pace of 20.5 percent.

Some economists said firm demand from emerging Asian markets such as China has helped to offset weakening demand from the United States and Europe.

Singapore's annual exports to China fell a slight 1.5 percent in May, a pullback from April's 19 percent rise.

Despite mounting concerns of a slowing economy, the Singapore central bank tightened monetary policy in April in its most aggressive move since the 2003 SARS outbreak to rein in 26-year high inflation.

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