Singapore Stocks: Singapore cuts growth outlook as trade war bites

Cornelia Mascio
Agosto 13, 2019

On May 21, the Government shaved the upper end of that forecast, which was revised to 1.5 per cent to 2.5 per cent. The economy expanded 3.2 percent in 2018. The country's economic growth has been averaging over 4 percent per year since 2011 and has not fallen below 1 percent since 2009. Economists in a Bloomberg poll had been expecting for a 0.2% growth for the final data.

MTI said on a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted by 3.3 per cent, a reversal from the 3.8 per cent growth in the first quarter.

The weak second quarter performance makes room for a possible technical recession, which is two straight quarters of decline in economic output.

SINGAPORE, Aug 13 ― Singapore has downgraded its Gross Domestic Product (GDP) forecast for 2019 to "0.0 to 1.0 per cent" from "1.5 to 2.5 per cent" previously projected, with growth expected to come in at around the mid-point of the forecast range.

In particular, the growth prospects of key emerging markets and developing counties like ASEAN-5 and China have worsened, partly due to the escalation in the US-China trade conflict in the past months, the MTI explained.

"Looking ahead, GDP growth in many of Singapore's key final demand markets in the second half of 2019 is expected to slow from, or remain similar to, that recorded in the first half", the Ministry of Trade and Industry said in a statement on Tuesday.

"Uncertainties and downside risks in the global economy have increased since three months ago", it warned, citing US President Donald Trump's announcement this month he would impose tariffs on an additional $300 billion of imports from China.

Also, the risks from a "no-deal" Brexit could also lead to substantial trade frictions between the United Kingdom and its trading partners which would contribute to negative repercussions to the economic growth of United Kingdom and the European Union.

The construction sector expanded by 2.9 per cent year-on-year, extending the 2.8 per cent growth in the first quarter.

In addition, during the second quarter of the year, manufacturing dropped by 3.1% year-on-year, a sharper dip from a 0.3% contraction in the previous quarter. The business services sector also eased to 0.5% growth from 1.7% in the previous quarter as the strong performance of the professional service segment offset the weakening real estate segment.

However, the MTI remains bullish on the aerospace and food & beverage manufacturing segments, information & communications, finance & insurance sectors, education, health & social services and the construction sector.

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