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Singapore narrows 2015 growth forecast to 2-2.5%

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Singapore's economy contracted in the second quarter as manufacturing activity declined, data showed on Tuesday, and the government narrowed its 2015 growth forecast citing downside risks to global growth.

Gross domestic product fell 4.0 percent in the second quarter from the previous quarter on an annualized and seasonally adjusted basis, the Ministry of Trade and Industry (MTI) said on Tuesday.

That was better than the government's advance estimate issued in July, of a 4.6 percent contraction. The median forecast in a Reuters survey was also for a contraction of 4.6 percent.

MTI also revised its official gross domestic product (GDP) growth forecast for 2015 to 2.0-2.5 percent from 2-4 percent previously.

An uneven and sluggish global recovery has dampened growth in Singapore's trade-reliant economy, and weakness in the trade-dependent manufacturing sector weighed on second quarter growth.

The manufacturing sector contracted 18.3 percent in April-June from the previous quarter on an annualized basis. The government's advance estimate was for a contraction of 14.0 percent.

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MTI said global growth is expected to pick up gradually over the rest of the year, but added that there were some key downside risks, including those related to China, Singapore's biggest market for non-oil domestic exports (NODX).

"In China, the recent sharp correction in the stock market has heightened the risks to growth. In particular, consumer sentiment and spending in China could be adversely affected if the correction in the stock market worsens," Ow Foong Pheng, permanent secretary at the MTI, told reporters.

Trade agency International Enterprise Singapore on Tuesday revised its 2015 non-oil domestic exports forecast to growth of 1.0-2.0 percent from the previous expectations for 1.0-3.0 percent growth.