© Reuters. FILE PHOTO: Container Cranes depicted in Singapore, Singapore
By Fathin Ungku and John Geddie
Singapore – Reuters – Singapore reported gloomy preliminary growth data for the second quarter on Friday, including the slowest annual expansion rate over a decade, boosting efforts as a recession and monetary policy relief could come.
Quarterly GDP growth of 0.1
The Ministry of Commerce also said that the economy fell 3.4% seasonally and yearly – the largest contraction of nearly seven years compared to a forecast forecast of 0.1% growth and January-March expansion of 3.8%.
"It's pretty disastrous … far below even the worst street forecasts," says Selena Ling, heads of state and strategy at OCBC Bank.
The downturn in Singapore – which is often seen as a bellwether for world economy health – is the latest evidence that speed has slowed in Asia, as the annual trade war between the United States and China and the sliding growth weigh on the region's export-related economies.
In other Asian countries, analysts say South Korea can also flirt with a recession, while China on Monday is expected to report its slowest economic growth of at least 27 years.
Ling and others say that the main features of Singapore are the manufacturing industry.
During the second quarter, manufacturing went up by 3.8% from a year earlier, after shrinking 0.4% in the previous quarter.
The Singapore authorities have previously said they will revise their GDP growth for 2019 at 1.5% -2.5% and some analysts say there may be a recession by 2020.
The Common Technical Definition of a recession are two consecutive quarters of economic contraction.
Ling said she expects the authorities to soon lower their growth forecast for the full year to 0.5-1.5%.
Electronics production production, the main driver of Singapore's economy over the past two years, declined for the sixth month in May, while exports saw their biggest decline for more than three years.
Khoon Goh from ANZ, who described Singapore's economy as a "downtime" in the second quarter, said in a note that global trade "still fluctuates" from trade tensions and wider global slowdown, the risk of negative growth continues .
The disappointing Q2 figures have more economists expecting Singapore's monetary authority, the central bank, to facilitate its exchange rate-based monetary policy in its next political statement, which would apply in October.
"It was one in four chances earlier that MAS will facilitate. Now it has increased to 40% as they will ease in before or October," says Continuum Economics Jeff Ng to Reuters.
ANZ's note was headed " We now expect MAS to ease in October, "saying it expects MAS to reduce the height of its political bond slightly to 0.5% per annum from 1.0%.
ING said the central bank might live before October.
"Today's data suggests that the wait would put the economy in greater than necessary crisis. An imminent movement is therefore likely to appear, "it said in a note.
MAS blocked monetary policy twice last year in an effort to control rising price pressures and strengthen its currency – its first such tightening is in six years.