Singapore GDP growth eases to one-year low as trade risks mount

People ride up an escalator at a shopping mall in Singapore June 17, 2017. Singapore's 2018 Q2 growth has been disappointing. — Reuters pic
People ride up an escalator at a shopping mall in Singapore June 17, 2017. Singapore's 2018 Q2 growth has been disappointing. — Reuters pic

SINGAPORE, July 13 — Singapore’s economy expanded at a slower pace than forecast in the second quarter, clouding the outlook for the export-reliant city state at a time when global trade risks are rising.

Key highlights

Gross domestic product rose at a seasonally adjusted, annualised rate of 1 per cent from prior three months, according to preliminary data from trade ministry today. Bloomberg survey median was 1.3 per cent.

Growth is weakest since a contraction in the first quarter of 2017, data showed GDP expanded 3.8 per cent from a year earlier, compared with the median estimate of 4.1 per cent

Growth in Singapore’s economy, among the most trade-reliant in Asia, could ease further as an export boom moderates while risks are mounting. The nation is facing the threat of tariff wars, high oil prices, a global policy tightening cycle, and a US dollar appreciation.

On the domestic front, the government’s recent tightening of property curbs may slow the recovery in consumer demand, while putting the construction sector under more pressure.

“The biggest drag continues to come from construction,” said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp. in Singapore. “We had hoped to see a bottoming out before the end of the year, but with the most recent cooling measures, especially for the private residential sector, I’m not sure if we will see the light at the end of the tunnel.”

While the impact of the US-China trade conflict so far has been limited, a worsening in those relations could have severe implications for the global economy, Ravi Menon, managing director of the Monetary Authority of Singapore, warned last week. Authorities are projecting growth of 2.5 per cent to 3.5 per cent this year.

The Singapore dollar was little changed at 1.3632 against the greenback as of 8.34am. local time.

Other details

Manufacturing shrank at an annualised 0.1 per cent from the previous quarter, compared with a 21.3 per cent jump in the prior three months. Construction contracted 14.6 per cent; services expanded 2.5 per cent. — Bloomberg

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