Growth is forecast at 1.5-3.5 per cent next year from 3-3.5 per cent this year, according to the Ministry of Trade and Industry.
Singapore’s growth is tied to the outlook for the global economy amid US-China trade tensions.
The weakening outlook for the city-state is a bellwether for global growth because international trade dwarfs the domestic economy. The forecast also reflects shaken confidence in the financial markets in recent months as investors worry about international trade, investment and corporate earnings.
It said the “external demand outlook for the Singapore economy in 2019 is slightly weaker as compared to 2018” and “risks to the global economy are tilted to the downside”.
The economy grew by 2.2 per cent on a year-on-year basis in the third quarter, slower than the 4.1-per-cent growth in the preceding quarter, said Singapore’s Ministry of Trade and Industry (MTI).
“We did expect industrial production growth to moderate. But the pace of moderation was more prominent than initially thought,” said UOB economist Alvin Liew.
On a quarter-on-quarter, seasonally adjusted annualised basis, the economy expanded by 3 per cent, faster than the 1-per-cent growth in the second quarter, said the ministry.
On a sectoral basis, manufacturing grew by 3.5 per cent year on year, moderating from the 10.7-per-cent growth in the second quarter.
The construction sector contracted by 2.3 per cent year-on-year, a more gradual pace of decline as compared to the 4.2-per-cent contraction in the preceding quarter.
The MTI said construction output in the third quarter was hampered by weakness in public-sector construction.
Selena Ling of the Oversea-Chinese Banking Corporation in Singapore said prospects for the second half of 2019 were weak, given the combination of rising US interest rates and the looming trade war.
“The external demand outlook for the Singapore economy in 2019 is slightly weaker as compared to 2018. At the same time, risks in the global economy are tilted to the downside,” said Loh Khum Yean, Singapore’s permanent secretary for trade and industry.
“There is the risk of a further escalation of the ongoing trade conflicts between the US and its key trading partners, which could trigger a sharp fall in global business and consumer confidence,” Loh said.
Singapore’s status as a trading hub makes it a valuable indicator about the strength of the global economy. Picture credit: Flickr