Singapore economy contracted in the second quarter as trade wars weighed on the electronics and precision engineering, advance estimate from the Ministry of Trade and Industry showed Friday.
Gross domestic product shrink 3.4 percent on quarter-on-quarter annualized basis in the second quarter, reversing the 3.8 percent expansion in the previous period.
On a yearly basis, the economy grew marginally by 0.1 percent, following the first quarter’s revised 1.1 percent increase. Economists had forecast an annual growth of 1.1 percent.
The production-side breakdown of GDP showed that the manufacturing sector contracted 3.8 percent annually as the declines in the electronics and precision engineering cluster more than offset expansions in the rest of the manufacturing clusters. The US-China trade war and slowdown in global trade weighed on the electronic sector.
Meanwhile, the construction sector advanced 2.2 percent on year driven by an increase in public sector construction activity. At the same time, growth in the services producing industries held steady at 1.2 percent.
The longer the manufacturing sector remains depressed, the more likely this weakness will spill over into services and other sectors, Robert Carnell, an ING economist said.
The economist said data makes recent suggestions of an intra-meeting policy easing highly probable.
Monetary Authority of Singapore’s Managing Director Ravi Menon last month said growth outlook for this year is likely to be revised down as downside risks to growth clearly increased.
He said the full-year growth forecast of 1.5-2.5 percent is premised on the economy stabilizing in the third quarter, with a moderate pickup thereafter.
The material has been provided by InstaForex Company – www.instaforex.com