Singapore is an imperfect global barometer: Clara Ferreira-Marques

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HONG KONG (July 12): Singapore offers an imperfect global barometer. The Lion City grew at its slowest annual pace in a decade in the second quarter. That’s a perturbing signal from the first major outward-facing economy to report, and will worry tech exporters in the region. But the numbers from the tiny Southeast Asian nation can set off false alarms elsewhere.

Advance estimates for the three months to June were dismal. The US$360 billion economy virtually ground to a halt, growing just 0.1% from the same period a year ago; the quarter-on-quarter annualised and seasonally adjusted rate was even worse, showing a 3.4% drop. The shock was mostly down to manufacturing, particularly electronics, a sector which powered growth until recently, but has now been declining for several months. It suggests industrial production must have cratered in June, dropping as much as 8.5% year-on-year, economists at UOB estimate.

The crunch in Singapore is widespread, increasing the risk that a combination of the tech downturn, a cooling Chinese economy and the effects of a trade war could tip the city-state into a technical recession. The break on an otherwise impressive years-long growth run is worrying the government, with a general election looming. The finance minister has already come out to reassure. It will also unnerve Singapore's similarly trade-reliant neighbours too, from Malaysia to the Philippines.

Fortunately, Singapore has enough tools to navigate choppy economic waters: it can ease its exchange-rate based monetary policy later this year, and can offer fiscal stimulus too, with the 2019 financial year budget targeting a deficit of just 0.7%. The country will also continue efforts to diversify away from China, a contributor to its current pain.

Moreover, while the city state offers some indication of what is to come elsewhere, the message can get garbled. For one, Singapore frequently adjusts its preliminary figures. Numbers, particularly quarterly ones, are also volatile, meaning that while Singapore hinted at the global downturn that began in 2007, it called plenty of other turning points that did not translate into shocks for others. A little reassurance perhaps, in a cloudy outlook.


  • Singapore’s economy grew 0.1% in the second quarter of 2019, compared to a year ago, dragged down by a sharp contraction in manufacturing, according to official data released on July 12.
  • That is below the 1.1% forecast in a Reuters poll of 13 economists, and the slowest annual growth since the 2009 April to June quarter when it fell 1.2%.
  • The economy shrank 3.4% on a quarter-on-quarter, seasonally adjusted and annualised basis, compared to a 3.8% expansion in the January to March period.

(Clara Ferreira-Marques is a Reuters Breakingviews columnist. The opinions expressed are her own.)