Singapore’s December Retail Sales Fell to An 11-month Low

Philippines’ exports continued to decline in December to -12.3% yoy, sharply lower than a 0.3% decline in the previous month and marking the second straight month of decline. The continued sharp decline in exports was due to weaker export of manufactures and mineral products, which fell by -13.2% yoy and -42.8%, respectively. Notably, the decline in export of manufactures goods was attributed mainly to electronic products, the country’s top export product, which declined by 15.2% yoy in December (-1.8% in November), its largest drop since February 2013. Meanwhile, imports growth contracted by 9.4% yoy in December, from an expansion of 6.8% in November, its first decline since July 2017. The drag in import growth was due to weak imports for six of the top ten commodities, including transport equipment, mineral fuels and lubricants, and telecommunication equipment and electrical machinery. As a result, the country’s trade deficit in December had narrowed to US$3.7bn from US$3.9bn in November.

For the full year, exports averaged a decline of -1.8% yoy compared to a positive growth of 19.7% in 2017. Meanwhile, the trade balance widened to a record high of US$41.1bn in 2018 from US$27.4bn in 2017. In 2019, we believe the Philippines’ trade deficit may persist as the Duterte’s large infrastructure programme will continue to drive demand for imports especially for construction materials. We believe the larger trade deficit may also poses some risk to the country’s current account deficit, which has increased to US$6.5bn between January and September 2018 (surplus of US$1bn in JanSep 2017). On the external front, the National Economic and Development Authority (NEDA) highlighted that the merchandise trade in the Philippines had slowed due to the weaker Chinese economy and also dragged by the US-China trade tensions. The Socioeconomic Planning Secretary porposed that “the national government should continue to work on legislative reforms that will open up sectors for foreign investment”.

Separately, Singapore's retail sales declined by 6.0% yoy in December 2018, compared to a revised 2.4% drop in November. It was the second straight month of decline in retail trade and the steepest since January 2018, mainly due to the decline of motor vehicle sales by 20.7% yoy (-15.1% in November). Aside from that, the decline in sales was also registered for computer and telecommunications equipment (-16.8%), recreational goods (-5.8%), and watches and jewellery (-5.7%). Moving into 2019, retail sales may see some upside based on expectations of an improving labour market by the Ministry of Trade and Industry (MTI). Although MTI also anticipates faster inflation in 2019 of 1-2% (0.4% in 2018), it believes inflation will be capped by market competition in numerous consumer segments. On the economic growth, despite slower GDP growth anticipated in 2019 of 2.6% (3.3% in 2018), according to the latest quarterly survey by the Monetary Authority of Singapore, the outlook for growth in wholesale and retail trade remains optimistic at 1.7% in 2019 (1.3% in 2018).

Source: Affin Hwang Research - 15 Feb 2019