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Singapore’s economy grew at its slowest pace in more than two years in the fourth quarter. Photo: Xinhua

Singapore reports lowest GDP growth in two years as trade ministry warns manufacturers may be vulnerable

  • The economy grew 3.2 per cent for all of 2018, the ministry said, compared with its 3.3 per cent advance estimate
Singapore
Singapore’s economy grew at its slowest pace in more than two years in the fourth quarter, data showed on Friday, and the city state’s trade ministry warned that manufacturing is likely to face significant moderation this year.
Weakening growth momentum for Singapore’s open economy – a hi-tech manufacturing base and transportation hub – underscores the risks to Asia’s export economies from a slowdown in China and Beijing’s trade war with Washington.

Singapore’s growth pace is expected to slow in 2019 as manufacturing “is likely to see a significant moderation,” trade ministry official Loh Khum Yean said, adding that the important electronics and semiconductor sector were particularly vulnerable.

Singapore companies enduring mixed fortunes in US-China trade war

Loh said services – which account for roughly 70 per cent of the economy – are also likely to ease.

From a year earlier, gross domestic product grew 1.9 per cent in the fourth quarter, less than the 2.2 per cent advance estimate from the Ministry of Trade and Industry (MTI). That was the slowest on-year pace since the third quarter of 2016, when it grew 1.2 per cent.

In October-December, the economy grew 1.4 per cent from the previous three months on an annualised and seasonally adjusted basis, lower than the ministry’s initial estimate, made on January 2, of 1.6 per cent.

Singapore is still a heavily export reliant economy
Barnabas Gan, UOB bank

The economy grew 3.2 per cent for all of 2018, the ministry said, compared with its 3.3 per cent advance estimate.

It kept Singapore’s 2019 GDP growth forecast at between 1.5 and 3.5 per cent, but added that growth would likely be slightly below the range’s midpoint.

“Singapore is still a heavily export reliant economy,” said Barnabas Gan of UOB bank. “The weaker external environment outlook we are seeing right now, and the semiconductor slowdown, could inject further downside risk to our 2.5 per cent outlook.”

Taiwan, another key Asian exporter, on Wednesday trimmed its 2019 economic growth forecast because of weaker global demand for its semiconductors and tech gadgets.

Prospects for trade this year depend heavily on resolution or a lessening of the disputes between the United States and China. US tariffs on US$200 billion worth of imports from China are scheduled to rise to 25 per cent from 10 per cent if the two sides do not reach a deal by March 1, increasing pressure and costs in sectors from consumer electronics to agriculture.

Singapore and the other ‘little dragon’ economies have left Hong Kong huffing and puffing

For the whole of 2018, Singapore’s non-oil domestic exports expanded 4.2 per cent. Significantly, there was an 8.8 per cent drop in non-oil domestic exports to Singapore’s biggest trade partner, China, compared with a 31.1 per cent rise in 2017.

Trade ministry officials mainly put it down to a distortion caused by a high reading the previous year, but some analysts said it could be one of the first signs of an impact from the trade war.

The city state’s trade agency is expecting total export growth this year of zero to 2.0 per cent.

This article appeared in the South China Morning Post print edition as: Slow GDP growth prompts warning on manufacturing
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