Singapore exports losing edge: Report

Singapore exports losing edge: Report

SINGAPORE (AFP): Singapore's export competitiveness is weakening as a result of rising labor and business costs and the strengthening of the local currency, according to the U.S. investment house Salomon Brothers.

In a report released here, Salomon Brothers Singapore Pte. Ltd. said year-to-year unit labor costs were up 5.6 percent in the first quarter of the current financial year, the highest in 15 quarters.

Unit business costs grew at 4.1 percent, the highest in 12 quarters, while labor productivity growth slowed to 2.8 percent from 7.3 percent in the first quarter of 1994.

"With the unemployment rate falling to 1.7 percent in March 1995, cost pressures are likely to continue. Also the 3.6 percent appreciation of the Singapore dollar versus the U.S. dollar so far this year is unlikely to help export competitiveness," Salomon Brothers said.

Despite buoyant growth in the first quarter, Singapore's export growth rate has shown signs of moderating.

Salomon Brothers said growth of Singapore's exports to the United States had slowed to 7.9 percent in the first quarter of 1995 from 16.2 percent and 15.3 percent in the first quarter and fourth quarter of 1994.

In March exports to the United States grew by only 0.9 percent in what could be the "first sign of weaker demand from the U.S.," it said.

The first quarter economic survey of the Singapore government released on March 16 showed the economic growth rate slowing to 7.2 percent in January-March from 11.9 percent in the same period of 1994.