Singapore GDP Growth Eases to One-Year Low as Trade Risks Mount

(Bloomberg) -- 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, annualized rate of 1 percent from prior three months, according to preliminary data from trade ministry on Friday; Bloomberg survey median was 1.3 percent
  • Growth is weakest since a contraction in the first quarter of 2017, data showed
  • GDP expanded 3.8 percent from a year earlier, compared with the median estimate of 4.1 percent

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 U.S. 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 U.S.-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 percent to 3.5 percent this year.

The Singapore dollar was little changed at 1.3632 against the greenback as of 8:34 a.m. local time.

Singapore GDP Growth Eases to One-Year Low as Trade Risks Mount

What Our Economists Say...

Weaker net exports were behind the slowdown. Consumer credit growth was broadly stable, while lending to businesses picked up. With trade war talk now turning to action, Singapore’s growth in the second half of the year is likely to be much, much softer.

-- Tamara Henderson, Bloomberg Economics

Other Details

  • Manufacturing shrank at an annualized 0.1 percent from the previous quarter, compared with a 21.3 percent jump in the prior three months
  • Construction contracted 14.6 percent; services expanded 2.5 percent

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