Singapore's economy unexpectedly contracts in second quarter
July 14, 2014 00:00
SINGAPORE - Singapore's trade-reliant economy unexpectedly contracted in the second quarter, the government said Monday, as weak global demand weighed on the key manufacturing sector.
Gross domestic product (GDP) shrank an annualised 0.8 per cent on-quarter in the three months to June, according to advance trade ministry estimates that were below market expectations.
The decline was due to a 19.4 per cent quarter-on-quarter contraction in the manufacturing sector, the trade ministry said, citing a fall in the output for electronic goods, a main export for the Southeast Asian city-state.
On a year-on-year comparison, GDP rose 2.1 per cent, but much slower than the 4.7 per cent growth during the first quarter.
Growth in the construction sector moderated to 5.0 per cent from 6.4 per cent the year before, while services expanded at a slower pace at 2.8 per cent from 3.9 per cent.
Sectors such as construction are under pressure owing to tighter government rules for foreign labour aimed at placating public anger over a surge in immigration, analysts said.
Monday's GDP figures are based on two months of data and are used to gauge the economy's performance ahead of the release of the final numbers.
The weakness in manufacturing industries, which contribute a fifth of Singapore's economy, pose "downside risks to our 2014 GDP growth outlook," United Overseas Bank said in a commentary.
Capital Economic research house said however that "we still expect the ongoing recovery in advanced economies to underpin reasonably healthy growth over the rest of the year".
The government expects GDP to grow 1.0-3.0 per cent this year, barring downside risks.