The Singapore economy grew at a slower pace in the second quarter on notable contraction in construction, data published by the Ministry of Trade and Industry showed Monday.
Despite forecasting a moderation in growth going forward in the second half of this year, the government maintained its economic outlook for 2018.
Gross domestic product grew a revised 3.9 percent year-on-year in the second quarter, easing from the 4.5 percent growth in the previous three months. Nonetheless, the estimate for the June quarter was revised up from 3.8 percent.
On a quarter-on-quarter seasonally-adjusted annualized basis, the economy expanded by a revised 0.6 percent compared to the 2.2 percent growth in the preceding quarter. The MTI earlier estimated 1 percent expansion.
The pace of expansion in the city-state economy is forecast to moderate further in the second half of 2018.
Taking into account the global and domestic economic environment, as well as the performance of the Singapore economy in the first half of the year, the ministry maintained the GDP growth forecast for this year at “2.5 to 3.5 percent”.
The revised estimate of Singapore’s second quarter GDP confirmed that the economy lost some steam in the three months to June, Krystal Tan, an economist at Capital Economics, said.
With global growth set to cool and local interest rates rising, Singapore’s growth is set to slow in the next couple of years, the economist added.
The MTI cautioned that there is a risk of a further escalation of the ongoing trade conflicts that could lead to a vicious cycle of tit-for-tat measures between the US and other major economies.
“Should this happen, there could be a sharp fall in global business and consumer confidence, and in turn, investment and consumption spending,” the ministry said.
Another downside risk is the disorderly capital outflows from emerging market economies in the event of a faster-than-expected normalization of monetary policy in the U.S.
Elsewhere, Enterprise Singapore raised its 2018 growth projection for non-oil domestic exports to 2.5-3.5 percent.
The production-side breakdown of GDP showed that the manufacturing sector surged 10.2 percent, while construction shrank 4.6 percent.
The wholesale and retail trade grew 1.5 percent and transportation and storage sector climbed 1.3 percent. The annual growth in accommodation and food services came in at 4 percent.
The information & communications sector expanded by 5.2 percent year-on-year and the finance and insurance sector grew 6.7 percent.