Singapore yesterday narrowed its full-year economic growth forecast after the trade-reliant economy contracted in the second quarter due to weakened global demand.
The full-year growth forecast was trimmed to 2 percent to 2.5 percent this year from 2 percent to 4 percent, after a 4 percent quarter-on-quarter contraction in April to June, the Singaporean Ministry of Trade and Industry said in a statement based on final data for the quarter.
The second-quarter contraction reversed growth of 4.1 percent in the previous three months, the ministry said.
“Several key downside risks in the external economic environment remain,” it said in the statement. “The global economy performed weaker than expected in the first half of 2015. For the rest of the year, global growth is expected to pick up gradually, although the pace of growth is likely to be uneven across economies.”
It added that “growth in some labor-intensive sectors such as food services may be weighed down by labor constraints.”
The construction industry grew 2.9 percent on a quarter-on-quarter basis, compared with 4.2 percent growth in January-March.
Meanwhile, the accommodation and food services sector shrank 1.4 percent from the previous quarter, following a 6.5 percent dip in the first three months of the year.
Sectors such as construction and hospitality are under pressure due to tighter government rules for foreign labor aimed at placating public anger over a surge in immigration, analysts have said.
The large presence of foreign workers has become a hot-button political issue in the city-state, with widespread expectations a general election is to be called next month.
Some citizens complain that foreigners are competing with locals for jobs, causing overcrowding and straining public transport and other services.
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