SINGAPORE’S economic growth came in below earlier estimates at 1.2 per cent in the first quarter of the year – the slowest quarter growth in nearly a decade– as manufacturing shrank amid global trade tensions and an electronics slowdown.
This was lower than both the Ministry of Trade and Industry’s (MTI) flash figures of 1.3 per cent growth and a Bloomberg survey of analysts, which expected a 1.4 per cent expansion. It is also the smallest annual expansion for any quarter since April-June 2009, when gross domestic product shrank 1.7 per cent from a year earlier.
The MTI also narrowed downwards its full-year growth forecast to 1.5 to 2.5 per cent, from 1.5 to 3.5 per cent, after “taking into account the performance of the Singapore economy in the first quarter, as well as the weaker external demand outlook”.
The global growth outlook for 2019 has weakened further since the last survey in February, and remains “clouded by uncertainties and downside risks”, the ministry said in its Economic Survey of Singapore released yesterday.
These risks include trade tensions between the United States and China, slower-than-expected growth in the Chinese economy and the delay in Brexit until October 31, resulting in prolonged economic uncertainty.
“With the recent trade actions announced by the US and China, there is a risk of a further escalation of the trade conflicts between the US and its key trading partners, especially China,” said Permanent Secretary for Trade and Industry Gabriel Lim at a media briefing yesterday.
“Should this happen and trigger a sharp fall in global business and consumer confidence, investments and consumption could decline, thereby adversely affecting global growth.”
Growth expectations have weakened for both the US and the euro zone economy as well, and China’s economy is also expected to slow in 2019.
Against this backdrop, manufacturing “is likely to see a sharp slowdown in growth following two years of robust expansion”, especially in the electronics and precision engineering clusters, said the MTI.
But it added that pockets of strength lie in prospects for the information and communications sector, construction, as well as the education, health and social services segment.
Leading growth in the first quarter was the information and communications sector, which expanded by 6.6 per cent year on year, faster than the 5.0 per cent growth in the previous quarter.
“Growth was driven by the IT and information services segment on account of firms’ robust demand for IT and digital solutions,” said the MTI.
Meanwhile, the finance and insurance sector grew by 3.2 per cent and the construction sector grew by 2.9 per cent, a turnaround from the 1.2 per cent decline in the previous quarter and the first quarter of year-on-year growth after 10 consecutive quarters of contraction.
The “other services industries” grew at a faster pace of 2.2 per cent year on year, compared to the 0.3 per cent growth in the previous quarter as well, primarily driven by an expansion in the education, health and social services segment on the back of a continued ramp-up of operations in healthcare facilities.
However, the manufacturing sector contracted by 0.5 per cent year on year, a pullback from the 4.6 per cent growth in the previous quarter. This was due to output declines in precision engineering and electronics, in turn due to weak global semiconductor and semiconductor equipment demand.
Growth in the business services sector eased to 2.3 per cent year on year, the wholesale and retail trade sector shrank by 1.8 per cent, while transportation and storage saw growth of 0.8 per cent. The accommodation and food services sector grew by 1.8 per cent.