The economic growth forecast for Singapore has been cut to 0.0 percent from 1.0 percent for 2019, as the global outlook has continued to weaken amid the escalation of the U.S.-China trade war, the Ministry of Trade and Industry (MTI) said in a release Tuesday.
“The growth prospects of key emerging markets and developing economies such as ASEAN-5 and China have worsened,” MTI said. ASEAN stands for Association of Southeast Asian Nations.
“Concurrently, the global electronics cycle has entered a sharper-than-expected downswing, with the ongoing downturn exacerbated by the uncertainty caused by the U.S.-China trade conflict. [The downswing] will pose a greater drag on economies with sizeable electronics and related sectors,” MTI said.
The MTI said Singapore’s economic growth was likely to be around the mid-point of the range.
For the second quarter, Singapore’s gross domestic product edged up 0.1 percent on-year, compared with 1.1 percent growth in the first quarter, MTI said.
On a quarter-on-quarter seasonally adjusted basis, GDP contracted 3.3 percent, swinging from 3.8 percent growth in the first quarter, the MTI said. Analysts have projected that Singapore may enter a technical recession, which is two consecutive quarters on-quarter of contraction in GDP.
The manufacturing sector contracted 3.1 percent on-year in the second quarter, wider than the 0.3 percent contraction in the first quarter, weighed by output declines in electronics, transport engineering and precision engineering, MTI said.
The wholesale and retail trade sector reported a 3.2 percent on-year contraction in the quarter, wider than the previous quarter’s 2.5 percent decline, on a decline in the machinery, equipment and supplies sub-segment. The retail trade segment contracted as both motor vehicle and non-motor vehicle retail sales fell, MTI said.
“The weaker-than-expected performance of the electronics and precision engineering clusters in the first half of 2019 is expected to be sustained into the remaining quarters of the year due to the deterioration in the outlook for global semiconductor demand,” MTI said. “The downturn in these clusters will also continue to have negative spillover effects on the wholesale trade segment.”
The construction sector posted a 2.9 percent on-year expansion in the quarter, extending the first quarter’s 2.8 percent growth, supported by public-sector construction works.
The transportation and storage sector posted a 2.2 percent on-year growth in the quarter, up from 0.7 percent growth in the first quarter, mainly on the air transport and water transport segments on an increase in air passengers handled at Changi airport and total sea cargo volume.
The finance and insurance sector reported a 5.2 percent on-year increase, up from a 3.2 percent expansion in the first quarter, on expansion in the fund management, foreign exchange trading and payment and money-changing segments.
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