Private sector economists have sharply lowered their growth forecasts for the economy this year.
They have slashed estimates from the 2.1 per cent tip made in June to just 0.6 per cent in the light of worsening economic conditions and geopolitical risks, in a poll of 23 private sector economists and analysts by the Monetary Authority of Singapore in its quarterly survey.
The lower forecast is in line with official estimates, which have been dialled back from an annual growth of between 1.5 and 2.5 per cent to between 0 and 1 per cent.
This revision came as second-quarter growth slowed to 0.1 per cent from 1.1 per cent in the previous three months.
In the survey released yesterday, experts said they expect year-on-year growth of 0.3 per cent in the third quarter, and cited further escalation of trade tensions between the United States and China as their top concern.
An economic slowdown in China triggered by external uncertainty and domestic financial market instability also continued to be a concern.
Geopolitical risks in places such as Hong Kong and the Persian Gulf were widely cited as well.
Associate Professor Lawrence Loh, from the National University of Singapore Business School, said: "Singapore, as an open economy, is particularly vulnerable to external shocks. The world now is going through a most unprecedented tumultuous period, politically and economically.
"The critical downside risk for Singapore relates to businesses that rely on the global environment, especially those in export-oriented industries."
But he added that the withdrawal of the extradition Bill by Hong Kong leader Carrie Lam yesterday can be a turning point. He said: "It's a significant concession before the protests degenerate past the point of no return. It is the start of the restoration of normal governance and stability, which augurs well for the regional and global economies."
On the upside, economists said easing trade tensions could bolster growth in Singapore. However, the survey report said they believed such an outcome is becoming less likely. Other potential benefits could come in the form of fiscal stimulus here and elsewhere, and changes to monetary policy such as lower interest rates in developed markets.
The economists downgraded their forecasts for most sectors, including manufacturing, construction, wholesale and retail trade, accommodation and food services, and non-oil domestic exports.
They were most pessimistic about non-oil domestic exports, expecting shipments to contract by 9.2 per cent year on year, far worse than their June prediction of a 2.1 per cent decline. They also said they expect manufacturing to shrink by 2.4 per cent, compared with the estimated 0.2 per cent dip in June.
The economists also maintained a gloomier outlook for retail and wholesale trade, downgrading growth figures to a 2.8 per cent decline, down from the predicted 0.3 per cent drop in June.
However, they expect the finance and insurance sectors as well as private consumption to grow.
The economists also foresee the Singapore dollar weakening against the greenback by the end of the year, dropping to $1.388 from the $1.368 they predicted in June.
The three-month Singapore Interbank Offer Rate, or Sibor - the benchmark for the pricing of most home loans - is expected to drop to 1.65 per cent by the end of the year, down from the 2 per cent they forecast in the June survey.