World Economy

Amid Uncertainty Singapore Growth to Slow Down

Manufacturing grew 8%, backed by electronics and precision engineering clusters.Manufacturing grew 8%, backed by electronics and precision engineering clusters.

Singapore’s economy grew more slowly than expected in the second quarter, but managed to narrowly avoid a technical recession.

Still, the tepid numbers hint at more uncertainty ahead. Economists warn that growth is likely to ease further in this half of the year, and note that performances across sectors remain uneven, CNA reported.

The economy expanded 2.5% in the April-to-June quarter, according to Ministry of Trade and Industry advance estimates released Friday that take into account data from the first two months of the quarter. This fell slightly short of economists’ expectations of 2.7% growth.

Compared with the preceding three months, the economy grew 0.4% in the second quarter. This came after a 1.9% quarter-on-quarter contraction in the first three months of the year.

This meant Singapore just managed to avoid a technical recession, defined as two consecutive quarters of decline in economic output.

The manufacturing sector, which makes up a fifth of the economy, was once again the key growth driver in the second quarter, thanks to a global export rally which lifted demand for Singapore’s shipments of semiconductors and related equipment.

Manufacturing grew 8% from the same quarter a year earlier, extending the 8.5% growth in the previous three months. Growth was supported mainly by the electronics and precision engineering clusters.

OCBC Bank economist Selena Ling expects momentum in electronics manufacturing to remain robust “on the back of healthy semiconductor demand, especially in anticipating the launch of new products like the iPhone 8”, though it remains to be seen if the other manufacturing industries like the biomedical cluster will also step up.

But other economists, including UOB’s Francis Tan, think factories could be hard-pressed to expand at a similar pace for the rest of the year.

Growth across the rest of the economy has also been uneven. The construction sector shrank 5.6% in the second quarter—its fourth straight month of contraction—weighed down by weakness in both private- and public-sector building.

Services, which make up two- thirds of the economy, grew a tepid 1.7% in the second quarter, slightly faster than the 1.4% growth in the previous quarter. Expansion was supported primarily by trade-related sectors which benefited from stronger export demand.

Economists expect growth to slow in this half of the year as the global trade rally looks set to lose steam.


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