THE only forecast economists can make with any certainty these days is that of turbulent times ahead.
The Singapore economy shocked forecasters by growing just 1.7 per cent in April to June over the same period last year, according to advance estimates released on Tuesday by the Ministry of Trade and Industry. This was significantly below the 2.6 per cent tipped by economists, and the slowest quarterly rate of expansion in three years.
The main culprit was a lacklustre manufacturing sector, which has been hit hard by slow global growth and constraints at home from ongoing restructuring. The April to June period marked the third consecutive quarter of contraction in manufacturing, which makes up a fifth of the economy. Trade-oriented services, such as wholesale and retail trade and transportation and storage, have also been hit.
Small and medium-sized enterprises (SMEs) have been most affected by the overall slowdown, especially amid mounting regional competition and rising costs. This state of affairs seems unlikely to let up; the global economy is still hung over from the financial crisis and remains mired in a deep malaise.
There have been some tentative signs that the United States economy is on the road to recovery, but the outlook for China - Singapore's largest trading partner - is far cloudier.
The losses involved in China's recent stock market rout were of far greater magnitude relative to the Greek crisis, and opinions are divided over the long-term implications for the Chinese economy.
Economists are now looking ahead to the release of labour market data for the second quarter, due out at the end of this month. Just 300 jobs were added in the first three months of this year, which left some economists surprised and worried, though others believed it was a one-off.
Some economists also expect the Government to narrow its forecast range for full-year growth to 2 to 3 per cent, from the current 2 to 4 per cent.