Singapore: Economic growth plunges to 10-year low in Q2
July 12, 2019
The economy screeched to an abrupt halt in the second quarter following the first quarter’s slowdown. According to an advance estimate released by the Ministry of Trade and Industry, GDP mustered a marginal 0.1% annual growth rate in Q2, down from the revised 1.1% expansion registered in Q1 (previously reported: +1.2% year-on-year). The print marked the weakest outturn since Q2 2009 and underwhelmed market expectations of a 1.1% outturn. In quarter-on-quarter seasonally-adjusted annualized terms (SAAR), GDP fell a stark 3.4% in Q2, following the 3.8% expansion in Q1.
Q2’s dismal performance was primarily the result of a sharp 3.8% contraction in manufacturing output (Q1: -0.4% yoy), which was hampered by falling production in the electronics and precision engineering clusters. Moreover, growth in the construction sector slowed despite increased public sector construction (Q2: +2.2% yoy; Q1: +2.7% yoy), while growth in the services sector remained stable at Q1’s 1.2%.
A significant underperformance in the first half of the year spells trouble for the trade-reliant economy in the quarters ahead. Particularly, as the economy continues to face strong headwinds amid the persistent U.S.-China trade debacle, the global growth slowdown and sluggish tech demand cast a shadow over the outlook. That said, a more favorable base effect in H2 and the government’s fiscal stimulus measures should help buoy growth.
Author: Lindsey Ice, Economist