CAN. August 13, 2019

Singapore has cut its expected growth for the year to between 0 and 1 per cent.

Annual gross domestic product (GDP) is expected to come in “at around the mid-point of the forecast range”, said the Ministry of Trade and Industry (MTI) on Tuesday (Aug 13). This is sharply lower than the previous estimated range of 1.5 to 2.5 per cent, which was announced in May when MTI slashed the upper end of the growth forecast

The downgrade confirmed the economy as growing at its slowest pace in a decade during the second quarter.  GDP growth was at a tepid 0.1 per cent on a year-on-year basis during the April to June period, in line with the Government’s initial estimate and slowing from the previous quarter’s 1.1 per cent. 

For the second quarter, manufacturing was the main drag, with output declines in the electronics, transport engineering and precision engineering clusters resulting in a year-on-year contraction of 3.1 per cent. This was a much steeper decline than the 0.3 per cent contraction seen in the first quarter. 

The services producing industries logged growth of 1.1 per cent in the second quarter, compared with 1.2 per cent in the previous three months, as sectors like finance and insurance, and information and communications provided support.

The construction sector continued its recovery with growth of 2.9 per cent year-on-year, a slight increase from 2.8 per cent in the first quarter. Output remained supported by public sector construction works, said MTI. 

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy shrank by 3.3 per cent – a sliver away from the expected 3.4 per cent contraction, but a reversal from the previous quarter’s 3.8 per cent growth.

This will likely add on to existing concerns about a looming technical recession, which is defined as two straight quarters of quarter-on-quarter contraction.