Singapore economy shrinks in warning for global trade

Cornelia Mascio
Luglio 13, 2019

Khoon Goh of ANZ, who described Singapore's economy as at a "stand-still" in the second quarter, said in a note that with global trade "still reeling" from trade tensions and a broader global slowdown, downside growth risks remained.

The trade ministry also said the economy shrank 3.4 percent on a seasonally adjusted and annualised basis - the biggest contraction in almost seven years compared with a poll forecast of 0.1 percent growth and January-March's 3.8 percent expansion.

On a year-on-year basis, it expanded just 0.1 percent, the trade ministry said, marking the slowest rate since the global the global financial crisis in 2009 and also well short of estimates.

With its heavy dependence on foreign trade, Singapore is often seen as an indicator of the global economy's health. -China trade war and sliding growth weigh on the region's export-reliant economies.

The key manufacturing sector was hard hit, contracting 3.8 percent year-on-year, compared with a 0.4 percent decline in the previous quarter.

The standard technical definition of a recession is two consecutive quarters of economic contraction.

In a Reuters poll done after the release of the Q2 data, seven of 11 economists said they expected the Monetary Authority of Singapore to loosen its exchange-rate monetary policy in its next policy statement, due in October, with the other four forecasting no change.

For the past year, China and the United States have been raising tariffs on each other's exports in an increasingly bitter trade war that is weighing on the global economy and markets.

There are growing signs of the negative impact across Asia - factory activity in the region has slowed, while data to be released Monday is expected to show China's economy grew at its slowest rate in almost three decades in the second quarter. "Now, it has increased to 40% that they will ease on or before October".

ANZ's note, headlined "We now expect MAS to ease in October", said it anticipated the central bank would reduce the slope of its policy band slightly to 0.5% per annum from 1.0%.

Mr Shanmugam, who is also Minister for Home Affairs and part of the ruling People's Action Party central executive committee, said matters relating to healthcare and retirement adequacy are also important in Singapore's ageing society.

Today's data suggest that waiting would put the economy in greater than necessary jeopardy.

Even ordinary Singaporeans are beginning to feel the pinch.

"I've been here since February. Wow, many people moving out".

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