SINGAPORE: With the economy likely to continue facing “strong headwinds” for the rest of 2019, Singapore has reduced its expected growth for the year to between 0 to 1 per cent.
The Ministry of Trade and Industry (MTI) said on Tuesday (Aug 13) it expects annual gross domestic product (GDP) to come in “at around the mid-point of the forecast range”.
Advertisement Advertisement The downgrade in growth estimates to below the previously estimated range of 1.5 to 2.5 per cent, comes as official data confirmed the economy as growing at its slowest pace in a decade during the second quarter.
Singapore’s GDP grew a tepid 0.1 per cent on a year-on-year basis, in line with the Government’s initial estimate and slowing from the previous quarter’s 1.1 per cent.
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy shrunk by 3.3 per cent, a sliver away from the expected 3.4 per cent contraction, but reversing from the first quarter’s 3.8 per cent growth.
During the second quarter, manufacturing shrunk by 3.1 per cent year-on-year, deepening from a 0.3 per cent contraction in the previous quarter on the back of output declines in the electronics, transport engineering and precision engineering clusters.
Advertisement Advertisement The services producing industries grew by 1.1 per cent, compared with 1.2 per cent in the first quarter, thanks to growth in sectors like transportation and storage, information and communications, and finance and insurance.
The construction sector continued its recovery with 2.9 per cent growth, from 2.8 per cent in the first quarter, as output remained supported by public sector construction works.
In its outlook for the year, MTI said the global growth outlook has weakened further since its last Economic Survey in May.
In particular, the growth prospects of key emerging markets and developing economies, such as ASEAN-5 and China have worsened, partly due to the escalation in the US-China trade conflict in recent months.
At the same time, the global electronics cycle has entered a sharper-than-expected downswing, with the ongoing downturn exacerbated by the uncertainty caused by the US-China trade conflict.
Uncertainties and downside risks in the global economy have also increased since three months ago, MTI said.
These include the United States’ recent announcement of possible tariffs on an additional US$300 billion of imports from China, a steeper-than-expected slowdown of the Chinese economy, the possibility of a “no-deal” Brexit, as well as risks arising from the uncertainties in Hong Kong, the trade dispute between Japan and South Korea, as well as geopolitical tensions in North Korea and the Strait of Hormuz.
“Against this challenging external macroeconomic backdrop and the deepening downturn in the global electronics cycle, the Singapore economy is likely to continue to face strong headwinds for the rest of the year,” MTI said.
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