By SG Uncle Trader
October NODX numbers were – to put it mildly – crap. But going by the bubbly sound bites from economist calls, it seems that Singapore – which incidentally has the world’s highest trade-to-GDP ratio of 370% - is “recovering” purely because we will soon see STI at 2800 and Ang Mo Kio condos at $1,500 psf, never mind the fact that we’re in our 18th consecutive month of trade decline.
From the BT “Momentum stalls as Oct exports plunge”
It’s no wonder that Singapore’s economic planners are unsure of the economic recovery – and wary of pulling back the stimulus measures.
After two months of upward momentum – up 1.2 per cent in August and 2.9 per cent in September – Singapore’s domestic exports minus oil (NODX) stumbled in October and fell sharply.
The seasonally-adjusted 12.6 per cent month-on- month drop was the biggest since December 2002.
The BT editor, of course, had to throw in the obligatory “Singapore recovering because things are getting worse at slower pace” caveat into the article. To wit:
On a brighter note, last month’s NODX – a key leading indicator – posted a smaller decline from a year ago, keeping up with the year-on-year improvement made since January, when the NODX plunged by a record 35 per cent.
The future is so bright, I gotta wear shades. So, with the benefit of my cool pair of Lei Pan glasses (a Chinese copy version of its more famous counterpart) let’s take a closer look at the Oct numbers from IE:
1. Total trade down 12.4%
Total exports (i.e. imports + exports) decreased by 8.9%, after the 19% contraction in the previous month. So not only has exports gone down, we’re now importing less as well – down by 16% in October 2009.
2. NODX continues to decline, but economists say “we shouldn’t drive using the rear view mirror”
Great advice, Mr. Economists. But since you have been wrong about everything that matters to the wealth of the middle class in Singapore over the last few years or so, we’re not about to bet our farm on your ability to find your ass with your hands. So we’ll stick with the rear view mirror for now, since that’s at least accurate.
I’ve said it before, and I’ll say it again: if you thought last Xmas was bad, wait till you see this year’s. Everything in the US and Europe is pointing to a really really awful Yuletide season.
3. The key electronics pillar is crumbling like a scene from “2012″, but with less star power.
Even John Cusack can’t save this one: On a YoY basis, electronic NODX contracted by 14%, same as the decline in the previous month. According to IE: “The decrease in electronic domestic exports was largely due to lower domestic exports of parts of ICs, disk drives and ICs.”
Here’s a detailed account of how the biggest economies of the world are doing, and why they are getting so darn tightfisted with their money.
The Europeans are in the midst of a depression, but really, no one cares, unless you were a Singaporean exporter to that part of the world. According to the IE, “NODX to the EU 27 contracted by 22 per cent in October 2009, after the 15 per cent contraction in the previous month, because of decreases in both electronic and non-electronic NODX. Electronic NODX to the EU 27 contracted by 36 per cent in October 2009, after the 37 per cent decline in the preceding month.” Staggering.
More than 17% of the workforce in the US is either unemployed or underemployed, so it’s not surprising that they don’t feel the need to load up on the next iteration of the iPod. From IE, “NODX to the US decreased by 11 per cent in October 2009, after the 4.7 per cent decline in the previous month, due to lower electronic NODX. Electronic NODX to the US declined by 30 per cent in October 2009, after the 6.2 per cent decrease in the previous month”
China, supposedly the bright spot in the world economy, turns out to be interested only in buying SPC and Noble Group from Singapore, instead of big screen plasma TVs. “NODX to China decreased by 6.5 per cent in October 2009, after the 15 per cent decline in the previous month, due to lower electronic and non-electronic NODX. Electronic domestic exports to China decreased by 12 per cent in October 2009, after the 42 per cent decline in the previous month.”
As we’ve pointed out before, the decline is structural, not cyclical – The electronics industry in Singapore is in terminal condition. Expect more large-scale retrenchments by elec manufacturers as they move out in the next budgeting cycle.
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SG Uncle Trader, who spends much of his daily life attempting to divide by zero, unwinds by providing an independent and skeptical view on financial and economic issues that affect Singaporeans, with a special focus on the ongoing Global Financial Crisis.
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Say NO to internet regulation in Singapore.
[Thanks CR]