Trade-reliant Singapore is forecasting weaker demand from key markets in Asia next year, hurting the outlook for economic growth in the city-state as the US-China tariff dispute starts to bite.
Growth is seen easing to 1.5 percent to 3.5 percent next year from a projected range of 3 percent to 3.5 percent this year, the Singaporean Ministry of Trade and Industry said in a statement yesterday.
GDP for the third quarter disappointed, rising an annualized 3 percent from the second quarter and 2.2 percent from a year earlier, lower than the Singaporean government initially forecast.
As one of the most export-reliant nations in Asia, Singapore’s growth prospects are closely tied to the outlook for global economy and trade.
Authorities in the city-state have been fairly upbeat this year about the growth outlook, despite rising US-China trade tensions, but they expect the tariff dispute to hit growth in the region.
The government said the “external demand outlook for the Singapore economy in 2019 is slightly weaker as compared to 2018” and “risks to the global economy are tilted to the downside.”
Weaker growth complicates the outlook for monetary policy. The nation’s central bank, the Monetary Authority of Singapore, has already tightened monetary policy twice this year, encouraged by the solid growth outlook.
Selena Ling (林秀心), an economist at Oversea-Chinese Banking Corp in Singapore, said growth prospects for the second half of next year are not good, given the combination of rising US interest rates and a worsening trade war.
However, Singapore policymakers face the challenge of a relatively solid labor market and a pickup in inflation, which could prompt one more tightening move next year, she said.
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