A passer-by looks at her mobile phone as people take a selfie photo, with Singapore's central business district skyline, on May 10, 2019. (File photo: Reuters/Kevin Lam)
Singapore’s economy grew by a meagre 0.1 per cent year-on-year in the second quarter, the lowest in a decade, according to official estimates released on Friday (Jul 12).
That widely missed economists' forecasts and was the lowest since the second quarter of 2009 when gross domestic product (GDP) contracted by 1.2 per cent, according to Bloomberg data.
The flash estimate, which is computed largely from data gathered in the first two months of the quarter, was significantly weaker than the revised 1.1 per cent growth in the first three months of 2019.
The second-quarter figure was also much weaker than the 1.1 per cent expected by economists in a Reuters poll.
On a quarter-on-quarter seasonally adjusted annualised basis, Singapore’s GDP contracted by 3.4 per cent, way below the median forecast of 0.1 per cent in the Reuters poll and a reversal from the 3.8 per cent growth in the previous quarter.
Manufacturing, which accounts for about one-fifth of the economy, extended a 0.4 per cent decline in the first quarter to contract by a much wider 3.8 per cent between April and June on a year-on-year basis.
The contraction was due to output declines in the electronics and precision engineering clusters, which more than offset output expansions in the rest of the manufacturing clusters, the Ministry of Trade and Industry (MTI) said.
On the other hand, the construction sector continued its turnaround on the back of an increase in public sector construction activities. It grew by 2.2 per cent on a year-on-year basis, extending the 2.7 per cent expansion in the previous quarter.
The services producing industries expanded by 1.2 per cent on a year-on-year basis in the second quarter, unchanged from the previous three months, supported primarily by the finance and insurance, “other services industries”, and information and communications sectors, said MTI.
For the full year, MTI expects GDP growth to come in between 1.5 and 2.5 per cent, though that forecast range will be revised next month following a string of disappointing economic indicators.
Non-oil domestic exports logged double-digit declines for the third straight month in May. The purchasing managers’ index, a key barometer of activity in the manufacturing industry, contracted for the second consecutive month in June.
As a protracted trade conflict between the United States and China weighs down on global manufacturing, trade and investment, central bank chief Ravi Menon has said that Singapore’s growth for 2019 “is likely to be weaker than earlier envisaged”.
Some economists have also flagged the risks of a potential technical recession – defined as two straight quarters of quarter-on-quarter contraction – this year.
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