Singapore’s economy grew at its slowest annual pace in a decade in the second quarter, preliminary data showed on Friday, raising bets that a technical recession and monetary policy easing could be just around the corner, reports Reuters.
The quarter’s 0.1 per cent gross domestic product (GDP) expansion was below the 1.1 per cent forecast in a Reuters poll and the slowest annual growth since 2009’s second quarter, when it fell 1.2 per cent.
The trade ministry also said the economy shrank 3.4 per cent on a seasonally adjusted and annualized basis - the biggest contraction in nearly seven years compared with a poll forecast of 0.1 per cent growth and January-March’s 3.8 per cent expansion.
“It is quite disastrous ... way below even the worst street forecasts,” said Selena Ling, head of treasury and strategy at OCBC Bank.
The slump in Singapore - often seen as a bellwether for the health of the global economy - is the latest evidence that momentum has slowed across Asia as the year-long U.S.-China trade war and sliding growth weigh on the region’s export-reliant economies.
Elsewhere in Asia, analysts say South Korea may also be flirting with recession, while China on Monday is expected to report its slowest economic growth in at least 27 years.
Ling and others say the main drag for Singapore remains the manufacturing sector.
In the second quarter, manufacturing contracted 3.8 per cent from a year earlier after shrinking 0.4 per cent in the quarter earlier.
Singapore authorities have previously said they will review their 2019 full-year GDP growth of 1.5 per cent-2.5 per cent, and some analysts say there might be a recession in 2020.
The standard technical definition of a recession is two consecutive quarters of economic contraction.
Ling said she expects authorities to soon lower their full-year growth forecast to 0.5-1.5 per cent.
Singapore’s finance minister said in a Facebook post on Friday the government was not expecting the economy to slip into “a full-year recession”.
Electronics manufacturing output, the main driver of Singapore’s economy in the last two years, declined for the sixth consecutive month in May while exports saw their biggest decline in more than three years.