Singapore slashes growth forecast

13 Aug 19

Singapore has cut its growth forecast for 2019 following a downturn in its economy in the second quarter of this year.

The Ministry of Trade and Finance announced today that the prediction has been downgraded to ‘0 to 1%’, down from ‘1.5 to 2.5%’, with growth expected at about the mid-point of the range.

The economy contracted by 3.3% (on a seasonally adjusted basis) in the second quarter this year, a reversal of the 3.8% growth in the first.

Since the country’s last economic survey was published in May, the ministry said in a statement, “the global growth outlook has weakened further”.

Of particular concern to Singapore is the effect the trade war between the US and China will have on the electronics sector, which has experienced a “sharper-than-expected downswing”.

The IMF downgraded its global growth forecast for 2019 in its July review because of the escalating US-China dispute, which continues to have consequences far beyond the economies of those two countries.

This led to Singapore’s manufacturing sector, which relies heavily on electronics and engineering, contracting by 3.1% year-on-year – sharper than the 0.3% contraction in the previous quarter.

Other risks outlined by the ministry included a no-deal Brexit, political uncertainties in Hong Kong and the Japan-South Korea trade dispute.

In its statement, the ministry said: “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.”

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