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SINGAPORE'S non-oil exports probably grew slightly in June, lifted by a recovery in drugs shipments, but weak demand in the United States and Europe will likely drag on overall export growth in the months ahead.
Seven economists surveyed by Reuters forecast that Singapore's non-oil domestic exports probably rose a seasonally adjusted 3.5 per cent in June from May when exports unexpectedly fell 9.8 per cent, the sharpest drop in 2 years, as a plunge in pharmaceuticals exports dragged on overall shipments.
Exports growth in trade-dependent Singapore is seen as a good barometer for global demand, which has taken a beating this year from the global credit crunch and a crisis-stricken US housing market.
'Pharmaceuticals exports could recover but electronics will remain in the red,' said Mr Ng Shing Yi, an economist at United Overseas Bank.
Twelve economists surveyed said that from a year ago non-oil exports probably fell a median 4.15 per cent in June.
Annual shipments fell 10.5 per cent in May.
Singapore's electronics shipments, which account for about 40 per cent of the country's non-oil exports, has fallen on an annual basis for every month since February 2007.
'We will most likely not see a recovery in electronics until there is a pick-up in the US, but we see US demand staying weak for the whole of 2009,' Mr Ng said.
Europe and the United States buy nearly a third of Singapore's non-oil exports.
Drugs shipments, which account for about 10 per cent of Singapore's total non-oil exports, have fallen for the three months to May at an average rate of 31 per cent.
Pharmaceutical production is volatile because manufacturers shut factories when they switch from one drug to another.
However, some economists said the recent weakness in drugs was more protracted than would be expected from ordinary plant shutdowns for cleaning or product changes.
They said a strong Singapore dollar, which hit a record high of 1.3465 per US dollar on Tuesday, have dragged on exports as well. The Singapore dollar has risen 6.5 per cent against the US dollar this year.
Government trade agency International Enterprise Singapore is due to release the trade data on Thursday at 1 pm. -- REUTERS
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