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Singapore

Official figures released today by the Ministry of Trade and Industry have narrowed GDP growth projections for 2016 to 1-2%, down from 1-3%. 

In the second quarter of 2016, the economy grew by 2.1% year-on-year, which is unchanged from the first quarter. However, the economy grew marginally faster in Q2 at 0.3% compared to 0.1% in Q1.

According a statement, significant downside risks exist in the global economy. In particular, the UK’s vote to leave the European Union has heightened uncertainly across the Europe. The statement warned that any major knocks to consumer and business confidence could lead to a pullback in consumption and investment.

Also, as China continues to restructure its economy, corporate credit levels are on the rise, which could lead to a scenario of debt defaults, and tightened economic conditions.

Consequently, the growth of externally focused service sectors in Singapore, such as finance, insurance and wholesale trade has slowed from 2.7% in Q1 to 0.8% Q2 compared to the previous year.

Also, while manufacturing has grown by 1.1% year-on-year, the statement said this was restricted to certain areas such as in semi-conductors and biomedical manufacturing and may not be sustained in light of the sluggish global outlook.

Meanwhile, growth in the construction sector slowed slightly to 3.3% down from 4% in the previous quarter, year-on-year. However, growth in this sector is predicted to weaken, as firms become increasingly pessimistic about business conditions.

The tourism and accommodation sectors may be set to grow as new flights open between Singapore and inbound markets. Also, growth in other services industries and the information and communication sector was likely to remain resilient, according to the statement.