Singapore downgrades GDP outlook, avoids recession
By Chen Lin
SINGAPORE (Reuters) -Singapore slightly cut its economic outlook for 2023 on Friday after it narrowly averted a recession in the second quarter, with weak global demand a key drag on its trade-reliant economy.
Goss domestic product (GDP) expanded a seasonally-adjusted 0.1% quarter-on-quarter in April to June, slower than 0.3% growth seen in the government's advance estimate. The first quarter contracted 0.4%.
Industrial output and exports have fallen for nine straight months, raising the risk of a prolonged downturn, but a trade ministry official told a press conference a technical recession — two consecutive quarters of contraction — was not expected this year.
On an annual basis, the economy expanded 0.5%, compared with the advance estimate of 0.7% and first quarter growth of 0.4%, the Ministry of Trade and Industry (MTI) said in a statement.
Manufacturing will remain weak, dampened by a protracted downturn in electronics, while finance and insurance sectors will likely be subdued, MTI said.
On the bright side, consumer-driven and tourism sectors, stand to benefit from the region's post-pandemic recovery.
The ministry narrowed its GDP growth forecast to 0.5% to 1.5% this year from 0.5% to 2.5% previously. The economy grew 3.6% in 2022.
While the slowdown in manufacturing is proving to be «a little bit more protracted» than what the government initially thought, Singapore is expecting a modest recovery in the second half of the year, anchored by inbound tourism and resilience of consumer-facing sectors providing some cushion to growth, Yong Yik Wei, chief economist at MTI, said.
The Straits Times stock index was down 0.6% in morning trade, lagging other markets in Asia.
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