Economy

Singapore slashes 2019 growth forecast stoking recession fears

Singapore slashes 2019 growth forecast stoking recession fears”

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.

In May, the MTI had lowered the full-year forecast for Singapore from an earlier growth prediction of 3.5% to a growth of between 1.5% and 2.5%. This figure already showcased a steep slowdown, against the full-year GDP growth of 3.1% marked in 2018. The median estimates in a Bloomberg survey of economists was for 3% contraction on-quarter and 0.2% growth compared to a year ago.

The government said it expected growth of 0.0-1.0 percent this year, sharply down from the 1.5-2.5 percent previously estimated, marking the second downward revision this year.

Based on MTI's statement, it is stated that on a quarter-on-quarter seasonally-adjusted annualised basis, the economy shrunk by 3.3%, a cut from the expected 3.4% contraction, but a reversal from the 3.8% 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.

"The growth prospects of key emerging markets and developing economies... and China have worsened, partly due to the escalation of the US-China trade conflict in recent months", the trade ministry said. That comes after a 26.9% drop in electronics exports in the second quarter year-on-year.

Faced with the slowest growth the city-state has seen in a decade, Singapore has reduced its expected growth from 1.5 to 2.5 percent for 2019 down to a 0 to 1 percent for 2019, repots Straits Times.

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 ministry flagged a host of growing economic risks, including Hong Kong's political situation, the Japan-South Korea trade dispute, the Sino-US tariff war, slowing growth in China and Brexit.

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

The business services sector expanded by 0.5 per cent year-on-year, moderating from the 1.7 per cent growth in the preceding quarter.

Among the services sectors, the growth of the information and communications and finance and insurance sectors is projected to remain healthy, bolstered by the sustained demand for enterprise IT solutions and increased demand for payment processing services respectively.



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