Singapore slashes 2019 growth forecast stoking recession fears

Singapore slashes 2019 growth forecast stoking recession fears

Singapore slashes 2019 growth forecast stoking recession fears

The downgrade is the second time the Ministry of Trade and Industry (MTI) has trimmed Singapore's growth expectations this year as global trade headwinds continues to plague the economy.

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.

Going forward, MTI said that the GDP growth in many of Singapore's key markets such as the United States (US) and China are expected to either slow or remain similar to the first half of this year.

"Uncertainties and downside risks in the global economy have increased since three months ago", it warned, citing US President Donald Trump's announcement this month he would impose tariffs on an additional $300 billion of imports from China.

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Analysts at Standard Chartered notes that Singapore's final Q2 GDP print expanded by 0.1% y/y (-3.3% q/q SAAR), broadly unchanged from the advance print of 0.1% y/y (-3.4% q/q SAAR). In the year's second quarter, Singapore's economy reportedly contracted 3.3 percent, after an initial modest period of 3.8 percent growth in the first quarter.

Singapore's benchmark stock index fell 1.2% to a two-month low in early trade, underperforming other bourses in the region.

A central bank official said after the data that it was not considering an off-cycle policy meeting.

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Singapore, often seen as a bellwether for global growth, has been hit hard by the Sino-U.S. trade war which has disrupted world supply chains in a blow to business investment and corporate profits.

Also on Tuesday, Singapore cut its full-year forecast for non-oil domestic exports to a 9% contraction from an 8% fall previously.

For the second quarter, the republic's economy grew marginally by 0.1 per cent on a year-on-year basis, moderating from the 1.1 per cent growth in the previous quarter.

The outlook is challenging even into 2020 given the continued rebound in the electronics sector, lingering trade tensions, and the uncertain regional outlook.

With little sign that US-China trade row will be resolved soon, exports have been slipping across Asia and governments have slashed economic growth forecasts.

Upon reviewing the economic performance in the second quarter of the year, MTI noted that the global growth outlook has weakened further since its last Economic Survey in May.

Prime Minister Lee Hsien Loong said in his National Day message last week that Singapore is feeling the pains of the trade war, and the government is willing to stimulate the economy if needed.

"It feels like the storm is coming if you look at the whole macro economic fundamentals softening", said Selena Ling, head of treasury and strategy at OCBC Bank.

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