Singapore Sees Slower 2019 Growth as Key Export Markets Weaken

Nov 22 2018, 12:00 AMNov 22 2018, 3:03 AMNovember 22 2018, 12:00 AMNovember 22 2018, 3:03 AM

(Bloomberg) -- Trade-reliant Singapore is bracing for slower economic growth next year as demand in key markets in Asia weakens.

Growth is seen easing to 1.5 percent to 3.5 percent in 2019 from a projected range of 3 percent to 3.5 percent in 2018, the Ministry of Trade and Industry said in a statement on Thursday. Gross domestic product for the third quarter disappointed, rising an annualized 3 percent from the second quarter and 2.2 percent from a year ago, lower than the government initially projected.

Key Insights

As one of the most export-reliant nations in Asia, Singapore’s growth prospects are closely tied to the outlook for the global economy and trade
Authorities in the city state have been fairly upbeat this year about the growth outlook despite rising U.S.-China trade tensions, but they expect the tariff wars to start to bite as growth in China slows
The government said the “external demand outlook for the Singapore economy in 2019 is slightly weaker as compared to 2018” and “risks to the global economy are tilted to the downside”
Weaker growth complicates the outlook for monetary policy. The nation’s central bank, the Monetary Authority of Singapore, has already tightened monetary policy twice this year, encouraged by the solid growth outlook

What Our Economists Say...
“Growth of 2.2% y/y in 3Q was the weakest in 2 years. Part of the sharp slowdown boils down to base effects, but the rest is an omen for next year, when we start to see the impact of punitive tariffs on China. So far the slowdown in China is only due to domestic factors. I expect Singapore’s growth to come in the lower end of the government’s 1.5-3.5% forecast range for 2019, unless the U.S. backs off from its threat to lift the tariff rate on China to 25% from 10% on Jan. 1.” -- Tamara Henderson, Bloomberg Economics

What Our Economists Say...

“Growth of 2.2% y/y in 3Q was the weakest in 2 years. Part of the sharp slowdown boils down to base effects, but the rest is an omen for next year, when we start to see the impact of punitive tariffs on China. So far the slowdown in China is only due to domestic factors. I expect Singapore’s growth to come in the lower end of the government’s 1.5-3.5% forecast range for 2019, unless the U.S. backs off from its threat to lift the tariff rate on China to 25% from 10% on Jan. 1.”

-- Tamara Henderson, Bloomberg Economics

Get More

Here’s a table that shows the performance of key sectors: Singapore’s Third Quarter GDP Rise 2.2% Y/y (Table)
In a separate report, Enterprise Singapore raised its projection for non-oil export growth for this year to a range of 5.5 percent to 6 percent, and forecast expansion of 0-2 percent for next year
This table shows how exports to China have plummeted this year: Singapore Oct. Non-Oil Exports to China -25.8% Y/y; By Country