SINGAPORE - The Government has narrowed its growth forecast for the year in view of the weaker global outlook and concerns over Brexit.
Singapore's economy is now expected to grow by 1 to 2 per cent, from 1 to 3 per cent, the Ministry of Trade and Industry (MTI) announced on Thursday (Aug 11).
In the second quarter, Singapore's gross domestic product (GDP) grew by 2.1 per cent on a year-on-year, unchanged from the first quarter. This is lower than the initial estimate of a 2.2 per cent year-on-year growth announced last month.
"The global economic outlook has weakened slightly since three months ago in May. The UK's vote in June to leave the European Union has dampened and also added uncertainties to the global growth outlook.
"In line with this, most key economies, except for the US, are expected to see similar or slower growth in the second half of the year as compared to the first half of the year," MTI added in a statement.
On a quarter-on-quarter seasonally adjusted annualised basis, the economy expanded by 0.3 per cent, slightly faster than the 0.1 per cent growth in the preceding quarter.
MTI said the manufacturing sector grew by 1.1 year-on-year in the second quarter, reversing the 0.5 per cent decline in the first quarter. The growth was largely supported by an increase in the output of the biomedical manufacturing and electronics clusters.
Growth in the construction sector moderated to 3.3 per cent year-on-year, from 4.0 per cent in the first quarter, weighed down by a decline in private sector construction works.
The wholesale & retail trade sector expanded by 2.2 per cent year-on-year, a pullback compared to the 2.9 per cent growth in the previous quarter. MTI said the growth was driven by both the wholesale trade and retail trade segments, with the latter bolstered by motor vehicle sales.
The finance and insurance sector grew by 0.8 per cent year-on-year, owing to growth from the forex trading and insurance segments. However, this was slower than the 2.7 per cent growth in the previous quarter .
The business services sector recorded a slight contraction of 0.2 per cent on a year-on-year basis, compared to the 0.1 per cent growth in the first quarter. This was largely due to weaker performance in the real estate segment.
Meanwhile, Singapore's central bank flagged no change in its current zero appreciation policy for the Singapore dollar.
Ms Jacqueline Loh, deputy managing director of the Monetary Authority of Singapore (MAS), said a media briefing on Thursday: "The current stance of monetary policy remains appropriate for overall macro economic conditions in 2016. The narrowed growth forecast range for Singapore 2016 GDP growth falls within the planning parameters of MAS's April monetary policy decision.
"So in line with the subdued external outlook, expected growth of 1-2 per cent for this year, core inflation is expected to rise gradually and trend towards a historical average of close to 2 per cent over 2017."