Singapore's exports in December jumped for a second month thanks to solid shipments to China in a tentative sign of recovery for the external sector, but analysts were cautious about the outlook amid protectionist concerns stoked by incoming US President Donald Trump.
Non-oil domestic exports (NODX) rose 9.4 percent last month from a year earlier, the trade agency International Enterprise Singapore said in a statement on Tuesday, well above a rise of 5.8 percent predicted in a Reuters poll. The strong December figures were helped by a 33.5 percent year-on-year jump in shipments to China, the city state's major export market.
It comes after a surprise 11.5 percent rise in exports in November, which were driven by a sharp rise in shipments of pharmaceuticals and overall increases in sales to the European Union and China.
While the solid export figures suggested early signs of recovery in external demand, it failed to mask concerns about the outlook as investors wait to see if Trump carries through on his protectionist threats after he takes office on Jan. 20.
"Despite improvement in the economic conditions, trade policy from US is a great uncertainty and also China's own domestic reform could affect medium growth. But the worst of the exports cycle is already behind us", said Irvin Seah, economist at DBS bank.
In a speech on Monday, Singapore's central bank chief Ravi Menon underscored the anxiety felt by export-reliant economies such as Singapore, and cited Trump's rejection of the Trans-Pacific Partnership (TPP) trade deal as well as threats to label major trade partners as currency manipulators and impose heavy import tariffs on them as risk factors.
"Some of these actions may well attract retaliatory measures, leading to trade conflicts with disastrous consequences for the global economy," Menon said.
Singapore's economy has been on the ropes in the last two years with growth slipping to a seven-year low 1.8 percent in 2016, as exports fell away amid slow world growth. A small minority of analysts say a weak growth outlook could force the central bank to ease at its next review in April 2017 after it kept its exchange-rate based policy unchanged in October.
The December data backs an improvement seen in some regional economies, including in South Korea and Taiwan, which are among the most vulnerable to rising protectionism.
Singapore's sales last month were boosted by electronics rising 5.7 percent on-year. But overall exports to the US fell sharply by 16.4 percent from a year earlier, while those to the European Union also fell 4.8 percent after a sharp 48.1 percent jump in November.
The Singapore government's advance estimate of fourth-quarter gross domestic product released in early January showed the economy posted surprisingly strong growth at the end of 2016, but many economists see the risk of a further slowdown this year.
"This recent strong print (in exports data) might be in a nascent stage, and could actually be dampened by geopolitical tensions as well as the rise in protectionism," said Weiwen Ng, an economist for ANZ.
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