Singapore economy seen shrinking in second-quarter as recession risks grow: Reuters poll

10-Aug-2019 Intellasia | WTVBam | 6:02 AM Print This Post

Singapore’s economy is expected to have contracted almost 3 percent in the second quarter, a slight improvement from advance estimates but reaffirming the risk of a possible recession as the trade and manufacturing sectors struggle.

Final gross domestic product is forecast to have fallen 2.9 percent on a seasonally adjusted and annualised quarter-on-quarter basis, a Reuters poll showed. That is smaller than the 3.4 percent contraction forecast by the government but well below the first quarter’s 3.8 percent growth.

It would be the latest in a string of bad indicators for Singapore, often seen as a bellwether for global growth as international trade dwarfs its domestic economy.

“Given weak recent trends in industrial production, non-oil domestic exports and retail sales, I see little room for optimism,” said Steve Cochrane, Moody’s Analytics Asia-Pacific chief economist.

“My best guess then, is for the data to remain largely unchanged.”

Moody’s Analytics said in a note on Thursday that the chance of a global recession over the next 12-18 months had increased to 50 percent from 40 percent.

A raft of Asian banks including in New Zealand, India and Thailand cut interest rates this week, signaling major concerns about the outlook for economic growth. Last month, the US Federal Reserve cut interest rates for the first time since 2008.

Singapore’s central bank is widely expected to ease policy when it meets for the second of its semi-annual policy announcements in October, if not in an off-cycle move beforehand.

From a year earlier, Singapore’s economy is expected to have expanded 0.2 percent in the second quarter, its slowest pace in a decade, the median forecast in the poll of 11 economists showed.

That is slightly higher than the government’s advance estimate of 0.1 percent but well below 1.1 percent in the first-quarter.

In a note titled “a recession is coming”, Credit Suisse analysts said this week that sharp declines in Singapore’s core electronics manufacturing sector are expected to outweigh any strength in the construction and services sector.

“We expect 3Q19 to show a further sequential decline, driving a technical recession,” the analysts said, forecasting on-year growth of just 0.5 percent in 2019, well below government estimates of 1.5 percent-2.5 percent.


Category: Singapore

Print This Post

Comments are closed.