Singapore’s economy has been tipped to enter recession in the third quarter of 2019 as the fallout from the US-China trade war continues to rock the Southeast Asian nation after second quarter growth was confirmed at minus 3.3 per cent.
The gross domestic product (GDP) figure released on Tuesday was a huge decline on the 3.8 per cent growth in the first three months of 2019, and the worst reported quarterly growth for seven years.
On a year-on-year basis, the economy grew at just 0.1 per cent, down from 1.1 per cent in the first three months, marking the slowest rate of growth since the global financial crisis in 2008.
The worst performing sectors were manufacturing, which contracted by 3.1 per cent, and wholesale and retail trade, which fell 3.2 per cent.
Singapore’s Ministry of Trade and Industry (MTI) said the downturn was “partly due to the escalation in the US-China trade conflict in recent months”. China’s economy reported its lowest growth on record in the second quarter, 6.2 per cent, in parallel with Singapore’s slump.
Singapore’s imports and exports are also both in free-fall, with June’s exports suffering their worst decline for six years, falling by 17.3 per cent.
Non-oil exports from Singapore to China dropped 15.8 per cent last month, while those to Hong Kong fell 38.2 per cent – with many of the goods bound for Hong Kong eventually finding their way to mainland China.
July’s trade data will be released on Friday, with consensus forecasts signalling a near 10 per cent drop in exports.
Singapore’s business confidence index, meanwhile, a gauge of the sentiment in Southeast Asia’s financial hub, shrunk by 11 per cent in July, while the purchasing managers’ index, a gauge of how manufacturers feel about their outlook, has been in contraction for the past three months. Industrial production fell by 6.9 per cent in July – the fourth successive decline and the biggest drop since 2016 – confirming that the slowdown is becoming entrenched.
In light of the confirmed data, Singapore drastically downgraded its growth forecasts for the year, with MTI now predicting growth of the “midpoint of the forecast range” of between 0.0 and 1.0 per cent. This is a dramatic cut from the earlier annual forecast of between 1.5 per cent and 2.5 per cent.
Did you hear that we're writing Iraq's new Constitution?
Why not just give them ours? We're not using it anymore.