Growth in export-reliant Singapore suffered a surprise sharp contraction in the second quarter, official data showed yesterday, sending a stark warning that US-China trade tensions are hurting the global economy.
The city-state’s GDP shrank an annualized 3.4 percent, which was sharply down from 3.8 percent growth in the first three months of the year and well off forecasts of a slight expansion.
On a year-on-year basis, it expanded just 0.1 percent, the Singapore Ministry of Trade and Industry said, marking the slowest rate since the global financial crisis in 2009 and well short of estimates.
With its heavy dependence on foreign trade, Singapore is often seen as an indicator of the global economy’s health.
The dismal figures were the latest sign trade tensions between Washington and Beijing are having a major effect on export-reliant economies around the world.
“The ongoing US-China trade war ... is negatively impacting Singapore’s key manufacturing and export sectors,” Vanguard Markets Pte Ltd analyst Stephen Innes said.
COAL MINE CANARY
“Singapore is the canary in the coal mine, being very open and sensitive to trade,” said Chua Hak Bin (蔡學敏), an economist at Maybank Kim Eng Research Pte in Singapore.
The data point to the risk of a deepening slowdown for the rest of Asia. The key manufacturing sector was hard hit, contracting 3.8 percent year-on-year, compared with a 0.4 percent decline in the previous quarter.
EXPORT SLOWDOWN
The data added to concerns about a slowdown in the export sector — non-oil domestic exports plunged in May by the most since February 2013, driven by heavy falls in the electronics sector.
Like South Korea’s economy — which already contracted in the first quarter — Singapore is often held up as a bellwether for global demand given its heavy reliance on foreign trade.
Across Asia and Europe, factory activity shrank last month, while the US showed only a meager economic expansion.
Asia is the world’s growth engine and contributes more than 60 percent of global GDP, according to the IMF.
Rob Subbaraman, head of global macro research and cohead of global markets research at Nomura Holdings Inc, concurred, saying that the “large downside GDP miss does not bode well for the rest of Asia.”
TECHNICAL RECESSION
Some analysts are now betting that Singapore could slip into a technical recession — two straight quarters of economic contraction — next year.
There is also a greater chance that the Monetary Authority of Singapore, the central bank, will ease monetary policy in a bid to support the economy, economists say.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS