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Singapore's GDP badly misses forecasts, shrinking 3.4% from the prior quarter

Key Points
  • Singapore's economy shrank in the second quarter from the previous three months on an annualized basis, widely missing economists' forecasts, preliminary data showed on Friday.
  • On a quarterly, seasonally adjusted and annualized basis, GDP shrank 3.4% in April-June from the previous three months, the Ministry of Trade and Industry said in an emailed statement.
A view of Marina Bay Sands at sunrise on Sept. 18, 2016 in Singapore.
Rustam Azmi |Getty Images

Singapore's economy performed badly in the second quarter, with the slowest annual growth in a decade and sharp shrinkage from the previous three months as the manufacturing sector continued to decline, preliminary data showed on Friday.

From a year earlier, gross domestic product (GDP) expanded 0.1% in the second quarter, well below the 1.1% forecast in a Reuters poll and the revised 1.1% growth for January-March.

This is the slowest year-on-year GDP growth since the second quarter of 2009, when it fell 1.2%.

On a quarterly, seasonally adjusted and annualized basis, GDP shrank 3.4% in April-June from the previous three months, the Ministry of Trade and Industry said in an emailed statement.

A Reuters poll had forecast a marginal on quarter expansion of 0.1%. In the first quarter, GDP expanded 3.8% from the previous quarter.

This is the biggest quarterly contraction in nearly seven years, since a 4.1% fall in the third quarter of 2012 from the quarter earlier on a seasonally adjusted and annualized basis.

The second quarter flash numbers are "quite disastrous... way below even the worst street forecasts," said Selena Ling, head of treasury and strategy at OCBC Bank, adding that the main drag remains manufacturing.

In the second quarter, manufacturing contracted 3.8% from a year earlier after shrinking 0.4% in the quarter earlier.

Singapore authorities have previously said they will review their 2019 full-year GDP growth of 1.5%-2.5%, and some analysts say there might be a recession in 2020.

Ling said she expects authorities to soon lower full-year growth forecasts to 0.5-1.5%.

Electronics manufacturing output, the main driver of Singapore's economy in the last two years, declined for the sixth consecutive month in May while exports saw its biggest decline in more than three years.

Singapore's sluggish growth outlook has economists raising bets on the central bank easing its exchange-rate based monetary policy in its next policy statement, due in October.

The MAS tightened monetary policy twice last year in efforts to control rising price pressures and strengthen its currency — its first such tightening moves in six years.

The Singapore dollar weakened slightly on the GDP news, reaching S$1.3585 from S$1.3570 before paring the loss.