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Singapore cut the top end of its 2016 growth forecast after the economy expanded less than previously estimated in the second quarter, underscoring a weakening global environment. The benchmark stock index fell.
Gross domestic product expanded an annualized 0.3 percent from the first quarter, the Trade and Industry Ministry said Thursday. That compares with last month’s advance estimate of 0.8 percent, which was also the median forecast in a Bloomberg survey of nine economists. The economy grew a revised 0.1 percent in the first quarter.
The new 2016 forecast of 1 percent to 2 percent expansion is “in line with weaker global growth outlook, and barring the full materialization of downside risks,” the ministry said. The previous forecast was for as much as 3 percent.
The island nation, a financial center and major trading hub, faces what could be its slowest year since the global financial crisis. The world’s prospects have weakened since May, with Britain’s vote to leave the European Union adding uncertainties and China’s economy at risk from a potential spike in debt defaults, Singapore’s trade ministry said.
Manufacturing growth weakened in the second quarter from the previous three months, according to the report. A separate release showed total merchandise trade declined by 5.7 percent last quarter from a year earlier, non-oil domestic exports were flat and non-oil re-exports fell.
“The growth of externally oriented services sectors, such as finance and insurance and wholesale trade, has slowed,” the trade ministry said. “While the manufacturing sector has seen an improvement in performance on account of pockets of strength in segments such as semiconductors and biomedical manufacturing, this may not be sustained in the light of sluggish global economic conditions. Growth in the construction sector is also likely to weaken in the coming quarters.”
(BLOOMBERG)
