Is China's Slowdown Affecting Singapore's Economic Growth?
The island nation recorded lowest GDP growth in two years
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Singapore's GDP growth in 2019 is projected to be slower than 2018's 3.2 percent, according to the data released by Ministry of Trade and Industry (MTI). The major hit has come from a substantial decline in manufacturing and exports sector. With China being one of Singapore's biggest export destinations, as per economists the country's slowdown is a big threat to its GDP growth.
The Singapore economy grew by 2.2 percent on a year-on-year basis in the third quarter, slower than the 4.1 percent growth in the preceding quarter. On a quarter-on-quarter seasonally-adjusted annualized basis, the economy expanded by 3 percent, faster than the 1 percent growth in the second quarter, says the Ministry in its statement to press.
According to the information by Ministry, the manufacturing sector grew by 3.5 percent year-on-year, moderating from the 10.7 percent growth in the previous quarter. "All clusters within the sector expanded, except for the general manufacturing cluster which contracted on the back of output declines in the printing and miscellaneous industries segments. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector posted growth of 3 percent, extending the 3.3 percent growth in the previous quarter," says the Ministry.
How China's Slowdown Affecting Singapore
Amid the global economic slowdown, the survey declared one of the biggest causes of the fall is the projected slowdown in growth in Singapore's key final demand markets such as the US and China.
At the last Economic Survey of Singapore update in August, MTI maintained the GDP growth forecast for the Singapore economy in 2018 at "2.5 to 3.5 percent". Underpinning the forecast was the expectation that GDP growth in the second half of 2018 would moderate from that in the first half, given the projected slowdown in growth in Singapore's key final demand markets such as the US and China.
In Asia, China's growth is also projected to moderate in 2019 on account of a continued moderation in credit growth and softer external demand, although accommodative macroeconomic policies and stable domestic demand are likely to provide some support to growth. Similarly, growth in the key ASEAN economies is expected to ease or remain unchanged in 2019, supported by resilient domestic demand even as growth in merchandise exports moderates.
The Singapore economy grew by 3.2 percent in 2018 but according to official data, it was moderation from 3.9 percent in 2017. This has brought the gross domestic product below the mid-point of the range. Considering the manufacturing sector, 2018 saw a declining from 10.4 percent to 7.2 percent growth.