Singapore on Tuesday (13 August) significantly slashed its forecast for economic growth in FY20, as the city state's economy almost came to a grinding halt in the second quarter amid escalations in US-China trade war.
This, coupled with technology tensions, dwindling global growth and an electronics sector slowdown has led to most Asian economies facing headwinds, Strait Times reported.
The Ministry of Trade and Industry (MTI) now estimates Singapore's full-year GDP growth to settle midway between 0 to 1 per cent. It had previously downgraded the forecast range to 1.5 to 2.5 per cent.
The Ministry of Trade and Industry (MTI) announced today (13 August) that the GDP growth forecast for 2019 has been downgraded to “0.0 to 1.0 per cent”, with growth expected to settle at around the mid-point of the forecast range.
“The growth prospects of key emerging markets and developing economies in South-East Asia and China have worsened, partly due to the escalation in the US-China trade conflict in recent months,” the ministry added in the statement.
GDP growth for the second quarter (April to June) was at a tepid 0.1 per cent on a year-on-year basis, after slowing from the previous quarter’s 1.1 per cent growth rate. This figure was in line with the Singapore government’s estimates.
This is the slowest growth Singapore has witnessed in a decade, since the economy contracted 1.2 per cent year-on-year in the second quarter of 2009. The economy shrank 3.3 per cent quarter-on-quarter as well, marking a reversal from its 3.8 per cent growth in the first three months of that year.
The manufacturing sector in Singapore has borne the brunt of US and China slapping tit-for-tat tariffs on each other in a trade war that has been escalating since last year.
The abysmal growth rate has raised fears that Singapore may slide into recession amid global economic headwinds and a protracted trade war between China and USA.
Analyst attribute Singapore’s dismal growth on its dependence on high-tech exports which has further been exacerbated by trade tensions, that has disrupted supply chains across Asia.
Unless the export control imposed as US-China trade war is dispensed away, the prospect of economical revival for Singapore looks bleak.