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Economy

Singapore growth dips to lowest in 10 years

Second quarter GDP barely rises at 0.1% amid trade war

The Singapore government said last month it was reviewing this year’s growth projection of 1.5% to 2.5% to reflect downside risks.   © Reuters

SINGAPORE -- Singapore's economy grew 0.1% in the April-June quarter from a year ago, marking the lowest rate in 10 years as U.S.-China trade tensions hit electronic and other manufacturers, according to preliminary data released Friday by the government.

The latest real gross domestic product growth rate was lower than the 1.1% expansion in the January-March period, and the lowest since the April-June quarter in 2009 (minus 1.2%) when the world was hit by the financial crisis.

This set of results demonstrates the widening growth gap between Southeast Asia's beneficiaries and victims of the trade war. Vietnam, the fastest growing country that is seen benefiting from manufacturers' production shift from China, reported 6.7% GDP growth in the second quarter from a year ago and slightly lower than the previous quarter's 6.8%.

Other Southeast Asian countries have yet to release their second-quarter figures, but the latest quarterly consensus survey conducted by the Japan Center for Economic Research and Nikkei in June pointed to an expansion of 5.9% for the Philippines, 5.1% for Indonesia, 4.4% for Malaysia, and 2.7% for Thailand from a year ago.

In the April-June period a year ago, the six countries' GDP growth fell between 4.2% and 6.7%.

Singapore's manufacturing sector, which accounts for 20% of the economy, contracted by 3.8% in the April-June period. Singapore is a key production and export hub for high-end electronic products such as semiconductors.

"The contraction was due to output declines in the electronics and precision engineering clusters, which more than offset output expansions in the rest of the manufacturing cluster," Singapore's Ministry of Trade and Industry said in Friday's statement.

The construction sector grew 2.2%, backed by an increase in public sector construction activities, while the services sector expanded 1.2%.

Official statistics had already reflected signs of a serious downturn in manufacturing in the second quarter of 2019. Singapore's benchmark non-oil domestic exports dropped 15.9% in May from a year ago.

The government said last month it was reviewing this year's growth projection of 1.5% to 2.5% to reflect downside risks.

"Currently, the full-year forecast is premised on the economy stabilizing in the third quarter of 2019, with a modest pickup thereafter," said Ravi Menon, managing director of the Monetary Authority of Singapore on June 27.

"But the strength of this pickup, given the softer external environment and ongoing trade conflict, is unlikely to offset the weakness in the first half. And downside risks have clearly increased," he said.

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