960403

Electronics

oversupply to

dim S'pore

export growth

SINGAPORE: The oversupply in the global electronics industry is expected to slow down Singapore's export growth in 1996, said Salomon Brothers in its latest Weekly Pacific Perspective dated April 1.

"The electronics sector has been the most important component of Singapore's manufacturing industry. We estimate that electronics accounted for almost 50 percent of the country's industrial output and 60 percent of its non-oil exports in 1995," it said.

"Therefore, the deteriorating outlook for global personal computer (PC) demand in 1996 is a major concern for Singapore's trade and growth prospects.

"Oversupply is likely to persist, which supports our view that Singapore's export growth is likely to decelerate further in 1996."

Salomon said it forecast Singapore's gross domesic product (GDP) growth to slow to 8.0 percent in 1996 from 1995's 8.8 percent and its current account surplus to fall from 1995's US$15.3 billion to US$11.1 billion in 1996.

On the oversupply in the electronics industry, it said prices of four-megabyte dynamic random access memory chips (DRAMS) were expected to fall further to below US$5.00 per unit after dropping from US$12 in November to US$6.00 currently.

"This exceptionally high investment-to-sales ratio further suggests that the current inventory adjustment may not be temporary, and excess supply is likely to remain the major obstacle for the industry in the medium term," said Salomon.-Reuter