Sin­ga­pore slashes 2016 growth, ex­port out­look

> As econ­omy stum­bles, an­a­lysts fore­cast rocky path ahead that could in­clude tech­ni­cal re­ces­sion

The Sun (Malaysia) - - SUNBIZ -

SIN­GA­PORE: Sin­ga­pore’s gov­ern­ment slashed its eco­nomic growth and ex­port fore­casts for 2016 af­ter the econ­omy con­tracted in the third quar­ter, re­in­forc­ing the risk of a re­ces­sion amid fresh un­cer­tainty around global trade un­der US Pres­i­dent-elect Don­ald Trump.

Ex­ports in much of Asia’s trade-re­liant economies have crum­bled in the past year due to stub­bornly weak ex­ter­nal de­mand, with Sin­ga­pore’s man­u­fac­tur­ers one of the hard­est hit as growth in re­gional lo­co­mo­tive China cooled.

The trade-re­liant econ­omy is ex­pected to grow 1.0-1.5 % this year, com­pared with the pre­vi­ous pro­jec­tion of 1-2%, the Min­istry of Trade and In­dus­try said in a state­ment yes­ter­day.

The econ­omy shrank 2% in the Ju­lySeptem­ber pe­riod from the pre­vi­ous three months on an an­nu­alised and sea­son­ally ad­justed ba­sis, the min­istry said, bet­ter than the gov­ern­ment’s ini­tial es­ti­mate on Oct 14 of a 4.1% con­trac­tion.

The ex­ter­nal and do­mes­tic head­winds have raised the risk of a re­ces­sion in Sin­ga­pore, and height­ened the chance of fis­cal or mone­tary stim­u­lus over the near term, an­a­lysts said. The cen­tral bank held its ex­change-rate based pol­icy un­changed in its Oc­to­ber meet­ing, though some an­a­lysts say a de­te­ri­o­rat­ing growth out­look could force it to ease again at its next re­view in April 2017.

ANZ econ­o­mist Wei­wen Ng said the risk of a re­ces­sion in the cur­rent quar­ter can­not be ruled out, though that is not ANZ’s core view at this stage.

The higher US yields and stronger dol­lar seen af­ter the US elec­tion could di­vert cap­i­tal flows away from Asia and lead to higher do­mes­tic in­ter­est rates and tighter fi­nan­cial con­di­tions in Sin­ga­pore, he said.

“Therein lies the risk of a pos­si­ble sharp down­turn in Q4.”

MTI’s cen­tral view is that the econ­omy will avoid a tech­ni­cal re­ces­sion in the fourth quar­ter, its Per­ma­nent Sec­re­tary Loh Khum Yean told re­porters, adding that GDP is ex­pected to grow 1% to 3% in 2017.

The Sin­ga­pore dol­lar hit a 10-month low of S$1.44 (RM4.45) ver­sus a broadly strong US dol­lar yes­ter­day.

All the same, there are few signs of a pick up in Sin­ga­pore.

With Trump’s Nov 8 elec­tion vic­tory and his cam­paign prom­ise to tear up in­ter­na­tional trade deals threat­en­ing to shat­ter a frag­ile global re­cov­ery, Sin­ga­pore’s open econ­omy re­mains among some of the most vul­ner­a­ble mar­kets to US pro­tec­tion­ism. – Reuters

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