(Bloomberg) -- Singapore’s economy contracted sharply in the second quarter as exports continued to plunge amid a worsening global economy.
Gross domestic product in the trade-reliant city state declined an annualized 3.4% in the quarter compared with the first three months of the year. That compared with growth of 3.8% in the first quarter and 0.5% expansion forecast in a Bloomberg survey of economists.
- Singapore’s heavy reliance on trade and its complicated integration in regional and global supply chains makes it vulnerable to a slowdown in world growth and tariff wars. Exports have already taken a big hit over the past few months, with shipments plunging in May by the most since early 2013
- Manufacturing contracted an annualized 6% in the second quarter from the previous three months. Construction declined 7.6%, reversing a 13.3% expansion in the first quarter. The services industry shrank 1.5% in the second quarter
- The government sees the economy expanding 1.5%-2.5% this year, compared with 3.1% in 2018. Officials are set to revise that projection in August, Minister for Trade & Industry Chan Chun Sing told Parliament this week, adding that Singapore was “well-placed to weather the storm” given its sound economic fundamentals, strong fiscal position, and progress in restructuring the economy
- A restart to U.S.-China trade negotiations has done little to convince economists that the global economy can skirt a slowdown through the end of 2019 and perhaps beyond. Morgan Stanley analysts last month cut both their 2019 and 2020 growth forecasts by 20 basis points each, to 3% and 3.2%
- Weaker economic growth may prompt the Monetary Authority of Singapore, the nation’s central bank, to keep policy unchanged in October or possibly ease. The MAS uses the exchange rate as its main tool and left policy settings steady in April
--With assistance from Tomoko Sato.
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