SINGAPORE Singapore exports fell more than expected in December as a slump in sales to China deepened, adding to worries that global headwinds will keep the trade-dependent economy on a wobbly footing this year.
The data could revive expectations that the central bank will ease its monetary policy again in April or in an off-cycle move before that, especially as oil prices continue to tumble.
Non-oil domestic exports (NODX) slid 7.2 percent in December from a year earlier, trade agency International Enterprise Singapore said in a statement on Monday, missing the median forecast of a 5.1 percent contraction in a Reuters poll.
That compared with a 3.4 percent contraction in November.
"Today's NODX print reinforced our view that risks to the growth outlook is clearly skewed to the downside and could possibly elicit a further calibration in policy settings," said Weiwen Ng, an ANZ economist in Singapore.
Last year, Singapore economy grew 2.1 percent, the weakest performance since 2009 when the trade-dependent economy was hit by the global financial crisis.
Concerns about the global economy have heightened in recent weeks as crude prices continued to tumble amid concerns about ebbing demand and a supply glut. A broader rout in commodities and slowing growth in China have also rocked financial markets worried about the global economy.
Sales to China, Singapore's top overseas market, decreased 18.7 percent in December from a year earlier, compared to a 9.1 percent slide in November. Shipments to the European Union declined 2.9 percent last month.
Most economists say the city-state's central bank is unlikely to deliver a surprise off-cycle easing similar to the one in January last year, but a few see risks of monetary stimulus if oil prices fall more sharply or China's economy takes a turn for the worse.
Singapore core inflation slowed last year and set a five-year low of 0.1 percent in May, due to the impact of lower oil prices.
The Monetary Authority of Singapore expects core inflation, which the central bank uses to set policy, to rebound to between 0.5 to 1.5 percent for the whole of 2016 from a forecast of around 0.5 percent in 2015.
Selena Ling, head of treasury and research strategy for OCBC Bank, said the key will be whether the MAS sees the drop in oil prices as a temporary phenomenon or a structural shift.
"That will be key, the game changer. I think the slow growth story is pretty much priced in," she said.
(Editing by Shri Navaratnam)
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Updated Date: Jan 19, 2016 03:00 AM