The economy is now projected to expand by 1 per cent to 2 per cent in what could be the slowest year since 2009. This is narrower than the earlier 1 per cent to 3 per cent projection, the Ministry of Trade and Industry (MTI) said yesterday, laying out a sombre reading of prospects for the rest of the year.
It cited additional risks to growth, especially Britain’s vote in June to leave the European Union.
MTI permanent secretary Loh Khum Yean said Brexit “has dampened and added uncertainties to the global growth outlook”, which could see weaker growth in key economies.
The ministry also flagged the risk of a spike in China debt defaults and a potential sharper slowdown in China’s growth.
In the second quarter, Singapore’s gross domestic product – a key gauge of output – grew 2.1 per cent compared with the same period last year, MTI said.
But the economy grew just 0.3 per cent in the April to June period when compared with the first three months of the year.
Manufacturing – one-fifth of the economy – reversed from a 0.5 per cent decline in the first quarter to a 1.1 per cent second-quarter growth – lifted largely by growth in the electronics and biomedical clusters.
Still, MTI warned that this improvement may not be sustained.
Most sectors turned in weaker year-on-year growth in the second quarter compared with the first.
The services sector grew 1.4 per cent in the second quarter, down from the 1.7 per cent growth in the first, while growth in the construction sector slowed to 3.3 per cent, from 4 per cent in the first quarter.
Economists expect growth in the coming quarters to stay muted.
OCBC head of treasury research and strategy Selena Ling said: “Third-quarter growth may see a bit of a knockdown, partly due to the post-Brexit panic… for the full year, we are nowhere near a recession because, in the first half, GDP growth was already at 2.1 per cent.”
Ms Ling expects GDP this year to grow by 1.8 per cent, while DBS Bank economist Irvin Seah puts it at 1.5 per cent.