ZCZC
BCN-17
SINGAPORE-ECONOMY-GROWTH
Singapore economy shrinks in warning for global trade
SINGAPORE, July 12, 2019 (BSS/AFP) – Growth in export-reliant Singapore
suffered a surprise sharp contraction in the second quarter, official data
showed Friday, sending a stark warning that US-China trade tensions are
hurting the global economy.
The city-state’s gross domestic product shrank an annualised 3.4 percent,
sharply down from 3.8 percent growth in the first three months of the year
and well off forecasts of a slight expansion.
On a year-on-year basis, it expanded just 0.1 percent, the trade ministry
said, marking the slowest rate since the global the global financial crisis
in 2009 and also well short of estimates.
With its heavy dependence on foreign trade, Singapore is often seen as an
indicator of the global economy’s health.
The dismal figures were the latest sign trade tensions between Washington
and Beijing are having a major impact on export-reliant economies across the
world.
“The ongoing US-China trade war… is negatively impacting Singapore’s key
manufacturing and export sectors,” said Stephen Innes of Vanguard Markets.
And Chua Hak Bin, an economist at Maybank Kim Eng Research in Singapore,
added: “Singapore is the canary in the coal mine, being very open and
sensitive to trade.”
The data “points to the risk of a deepening slowdown for the rest of
Asia”, he added.
The key manufacturing sector was hard hit, contracting 3.8 percent year-
on-year, compared with a 0.4 percent decline in the previous quarter.
The data added to concerns about a slowdown in the export sector — non-
oil domestic exports plunged in May by the most since February 2013, driven
by heavy falls in the electronics sector.
Some analysts are now betting Singapore could slip into a technical
recession — two straight quarters of economic contraction — in 2020.
There is also a greater chance that the Monetary Authority of Singapore,
the central bank, will ease monetary policy in a bid to support the economy,
economists say.
For the past year, China and the US have been raising tariffs on each
other’s exports in an increasingly bitter trade war that is weighing on the
global economy and markets.
There are growing signs of the negative impact across Asia — factory
activity in the region has slowed, while data to be released Monday is
expected to show China’s economy grew at its slowest rate in nearly three
decades in the second quarter.
BSS/AFP/HR/1115