This article was originally published on Tuesday, 21 May 2019 at 8:12 A.M. SGT; it has since been updated.
Singapore’s Ministry of Trade and Industry lowered its economic growth forecast for the city-state to 1.5 percent to 2.5 percent for 2019, from 1.5 percent to 3.5 percent previously, on a weaker external demand outlook.
The Ministry also pointed to Singapore’s first-quarter gross domestic product (GDP) data, which showed the economy grew 1.2 percent on-year, down from 1.3 percent in the fourth quarter.
“The global growth outlook remains clouded by uncertainties and downside risks,” MTI said in a release on Tuesday. “Against this challenging external economic backdrop, key outward-oriented sectors in the Singapore economy are expected to slow this year.”
It pointed to the risk of further escalation of trade tensions between the U.S. and its key trading partners, including China, which could trigger a sharp fall in global business and consumer confidence.
The risk of slower-than-expected growth in China’s economy could also spur a sharp fall in import demand, which would weigh on the region’s growth, the MTI said.
Finally, it said the delay in Brexit until end-October, with uncertainty set to further weigh on consumer and business sentiment in the U.K. and EU.
“The electronics and precision engineering clusters, which have already contracted for two consecutive quarters, are expected to face strong
headwinds on account of a sharper-than-expected downturn in the global electronics cycle, as well as uncertainties arising from the ongoing trade conflicts,” it said.
Manufacturing sector contracts
In the first quarter, the manufacturing sector contracted by 0.5 percent on-year, compared with 4.6 percent on-year growth in the fourth quarter of 2018, MTI said.
That was due to output declines in precision engineering and electronics, on weak global semiconductor and semiconductor-equipment demand, even as the biomedical manufacturing, transport engineering and general manufacturing clusters expanded output, it said.
The transportation and storage sector grew 0.8 percent on-year in the first quarter, mainly on air transport as Changi Airport handled more passengers, even as water transport contracted on a decline in sea cargo at Singapore’s ports, MTI said.
The construction sector grew 2.9 percent on-year in the first quarter, after 10 straight quarters of contraction, on an increase in both public and private sector construction works, MTI said.
The information and communications sector expanded 6.6 percent on-year, faster than the fourth quarter’s 5.0 percent expansion, on robust demand for IT and digital services, MTI said.
The finance and insurance sector grew 3.2 percent on-year in the first quarter, extending the fourth quarter’s 3.7 percent expansion, largely on continued growth in the insurance segment and the “others” segment, which includes payment players and money-changing services, MTI said.
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