SINGAPORE - The economy grew 1.8 per cent in the second quarter, slightly faster than an earlier estimate of 1.7 per cent but significantly down from the first quarter's 2.8 per cent expansion, according to Ministry of Trade and Industry data released on Tuesday.
The ministry also said it has narrowed its growth forecast for the Singapore economy this year, amid slowing growth in China and an uneven global economic recovery.
The Singapore economy is now expected to grow between 2 and 2.5 per cent this year, from an earlier forecast of 2 to 4 per cent.
This is what some analysts are saying about the latest statistics.
Daniel Martin, Capital Economics
"GDP fell by 4 per cent quarter-on-quarter, which was...a sharp turnaround from growth of 4.1 per cent quarter-on-quarter in the preceding three months. Given that Singapore's economy is highly volatile, the second quarter contraction is not, on its own, cause for alarm, but the subdued outlook for global demand and the likelihood that local interest rates will rise over the next two years suggest any recovery will be disappointing and short-lived.
Wild swings in Singapore's manufacturing output are not unusual, particularly in the biomedical sector, where supply-side disruptions can cause lurches in activity. Some sort of rebound is therefore likely in the third quarter. That said, a sustained recovery in export growth looks unlikely based on the downbeat outlook for Singapore's main trading partners."
Irvin Seah, DBS
"The manufacturing sector has indeed been the weakest link. Overall manufacturing growth in the second quarter has shrunk 4.9 per cent against the advance estimate of a 4 per cent contraction.
The dicey outlook in Europe and the sharp deceleration in China have eroded any marginal improvement that can be gained from the US recovery. Risks in the external environment have risen, affecting consumer sentiments and global demand.
And this has been manifested in poor export sales, which underscored the sub-par performance in the manufacturing sector.
Beyond the rising external headwinds and global uncertainties, Singapore manufacturers
are also struggling with the double whammy of higher business costs and domestic labour crunch. While manufacturers are finding it difficult to take on new orders given supply side constraints, they are also losing their price competitiveness to regional players."