The Singapore economy has started 2019 on a sluggish note and the signs are that the weakness may persist through mid-year. But there could be a turnaround during the second half of 2019. After expanding by an above-potential 3.2 per cent last year, flash estimates based on January and February data, released last week by the Ministry of Trade and Industry, revealed that the Singapore economy grew at only 1.3 per cent year on year during the first quarter of 2019, the slowest pace since the global financial crisis of 2008. Based on these early numbers, the first quarter performance falls below even the bottom end of the Government's full-year forecast of between 1.5 per cent and 3.5 per cent for 2019, which has prompted some economists to suggest that the forecast might have to be cut by half a percentage point as the year continues.
The slowdown has been driven mainly by the weak performance of the manufacturing sector, which declined by 1.9 per cent year on year, after 11 quarters of growth. Export data for March released last week confirmed continued weakness, with non-oil domestic exports shrinking 11.7 per cent year on year, electronics shipments contracting by a sharp 26.7 per cent and exports declining to all of Singapore's top 10 markets, except the United States. Although there is some consolation in the fact that the export and growth data comes off the relatively high base of 2018, the indications are that manufacturing, at least, will continue to be sluggish, especially with leading indicators of electronics demand continuing to point to weakness. China's economic slowdown, lacklustre chip demand as well as uncertainties created by the US-China trade dispute are flagged as the main reasons. Economies other than Singapore are also affected; purchasing manager indexes for manufacturing in Japan, South Korea, Malaysia and Taiwan in February also pointed to contraction.