Weak performance in Singapore’s services is posing concern for the country’s gross domestic product and subdued growth momentum underscores the challenging external environment that is currently weighing on growth.
Financial services contracted by 11.2 percent q/q, on a seasonally adjusted annual rate (saar), dragging down the services more broadly. The service sector has now contracted for two consecutive quarters and is technically now in recession. Services accounts for some two-thirds of GDP and employment.
In addition, manufacturing growth fell back to 1.0 percent q/q saar, after surge in the biomedical cluster dissipated. Oil and gas (i.e., marine engineering) sector is still struggling while the uptick from electronics is unlikely to last given current global economic conditions.
Moreover, second quarter GDP growth was revised down to 0.3 percent q/q saar, from the advance estimates of 0.8 percent. In y/y terms, growth was revised to 2.1 percent from 2.2 percent. With a disappointing growth performance in the first half of the year, the government’s forecast has been revised down to 1-2 percent, from 1-3 percent earlier.
Meanwhile, while the economy has averted a contraction yet again, there is nothing to cheer about as companies and consumers will maintain a cautious note in the near term.
