Singapore narrows economic growth forecast
Singapore has adjusted its economic growth forecast for this year, citing sluggish external demand and a weak global economy. The Ministry of Trade and Industry announced that the growth forecast has been trimmed from an earlier estimate of 0.5% to 2.5% to a new range of 0.5% to 1.5%. The country’s gross domestic product for the April to June quarter grew by 0.5% year-on-year, falling short of the government’s previous estimate of 0.7%. The ministry stated that Singapore’s external demand outlook for the rest of the year remains weak.
On a quarter-on-quarter seasonally adjusted basis, Singapore’s economy showed marginal growth of 0.1%, narrowly avoiding a technical recession or two consecutive quarters of contraction.
Challenges in the manufacturing sector
The manufacturing sector, driven by exports, contracted by 7.3% year-on-year in the April-June period, worse than the 5.4% contraction in the previous quarter. The ministry noted that the global electronics downturn is expected to continue, with a gradual recovery expected towards the end of the year at the earliest. This is likely to weigh down manufacturing output, particularly in the electronics and precision engineering clusters.
Global downside risks
The finance and insurance sector is also expected to experience sluggish growth due to continued weakness in the external economic situation and tight financial conditions. The government highlighted several downside risks in the global economy, including the possibility of more persistent inflation in advanced economies, which could lead to tighter global financial conditions and reduced global spending. Additionally, escalating conflicts and geopolitical tensions among major global powers, such as the war in Ukraine, could result in supply disruptions, dampened consumer and business confidence, and a negative impact on global trade.
