SINGAPORE (Reuters) – Singapore’s exports recorded their worst decline in more than two years in December as shipments of electronics and pharmaceuticals plunged, official data showed on Thursday.

An aerial view of shipping containers stacked at the port of Singapore February 14, 2012. REUTERS/Edgar Su/Files

The unexpected decline comes despite ongoing trade talks between the United States and China to defuse trade tensions. Many economists expect the dispute to hurt trade-dependent Singapore in months to come.

Non-oil domestic exports in December fell 8.5 percent from a year earlier, data from the trade agency Enterprise Singapore showed, slowing further from a revised 2.8 percent decline the month before.

The outcome was well below a 1.5 percent increase predicted by economists in a Reuters poll and the worst performance since October 2016, when exports declined 14 percent year-on-year.

“This could show that U.S.-China trade talks have become a ruse, falling in line with disappointing China trade data,” Selena Ling, head of treasury research and strategy at OCBC, told Reuters. “There is a likelihood that (export fall) will continue into the first quarter.”

Earlier this week, China announced that its December exports unexpectedly fell 4.4 percent from a year earlier, the biggest monthly drop in two years, pointing to further weakening in the world’s second-largest economy.

On a seasonally adjusted month-on-month basis, the city-state’s exports contracted 5.7 percent in December after declining a revised 4.3 percent in November. The poll forecast a 2.1 percent expansion from the month before.

Electronic exports in December fell 11.2 percent from a year earlier, after a brief recovery in November when it rose 4.3 percent.

Pharmaceutical exports plunged 26.8 percent in December year-on-year after rising 7.3 percent the month before.

Earlier this month, Singapore announced that its economy grew more slowly than forecast in the fourth quarter after the manufacturing sector shrank, adding to jitters that the Sino-U.S. trade dispute will drag on growth in 2019.

ING said in a report it was difficult to pin the export decline on any single geopolitical factor such as the trade war as exports to both China and the United States had held up. But shipments across Asia were noticeably in the red and the trade data almost certainly means a downward revision to GDP, it said.

December exports to China and the United States grew 15.4 percent and 31.1 percent year-on-year, respectively.

Reporting by Fathin Ungku; Editing by Jacqueline Wong


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