Singapore revises quarterly GDP growth lower, flags risks from trade
SINGAPORE: Singapore’s economy grew slower than initial estimates in the April-June period on a quarter-on-quarter basis, revised data showed, as the government flagged a likely moderation in growth in the second half.
The city-state’s Trade and Industry Ministry (MTI) said retaliatory tariffs between the United States and its major trading partners and interest rate increases from central banks globally had tempered the outlook for the export-dependent economy.
Gross domestic product grew 0.6% in the second quarter from the previous three months on an annualised and seasonally adjusted basis, the MTI said.
That was weaker than the initial estimate of a 1.0% expansion, published in July, and the median forecast in a Reuters survey of 1.3% growth.
From a year earlier, the economy expanded 3.9% in the second quarter, marginally above the advance estimate of a 3.8% expansion but lower than the median forecast of 4.1%.
The MTI revised its first quarter growth to 2.2% from 1.5% on a quarter-on-quarter basis and its first quarter year-on-year growth to 4.5% from 4.3%.
“The pace of expansion in the Singapore economy is expected to moderate in the second half of 2018,” the MTI said in a press release, citing increased trade tensions between the United States and China and tighter financial conditions globally.
However, it maintained its growth forecast for this year at 2.5% to 3.5%.
“The step down in growth forecasts in the second half of 2018 was anticipated and has been taken into account in MAS’ baseline,” Jacqueline Loh, deputy managing director at the Monetary Authority of Singapore (MAS), told reporters yesterday.
“Mild inflationary pressures are expected to persist... the current monetary policy stance is appropriate.” Loh said core inflation is expected in the upper half of the central bank’s 1%-2% forecast range for 2018.
The MAS in April tightened its monetary policy for the first time in six years and upgraded its first quarter GDP last month.
Despite a cautious outlook, analysts point out that further tightening in October is not out of the question.
“I think the somewhat disappointing second quarter revision is not going to be a game changer for MAS. It still gives room for the MAS to tighten,” OCBC’s head of Treasury Research, Selena Ling, told Reuters.
“Even if you get a slowdown in the second half, your full year of 3% growth still looks like it’s in the bag, so it’s not disconcerting,” Ling added.
Even if you get a slowdown in the second half, your full year of 3% growth still looks like it’s in the bag, so it’s not disconcerting. Selena Ling