IMF cuts Singapore growth forecast to 0.5% in 2019

THE International Monetary Fund (IMF) on Wednesday cut its growth projection for Singapore to 0.5 per cent in 2019, down from an earlier estimate of 2 per cent in July, due to strong export headwinds and the downturn in electronics.

"Given Singapore's dependence on external trade, growth is projected to remain subdued at 1 per cent in 2020," Jonathan Ostry, deputy director for Asia and Pacific department at the IMF, said during a press conference in Singapore.

Overall, it lowered its growth projection for Asia to 5 per cent for 2019 and 5.1 per cent for 2020, about 0.4 percentage point lower than its projections in April, as growth softened in the first half of 2019 due to declining fixed investments and exports.

Mr Ostry said this represents the slowest pace of expansion for Asia since the global financial crisis a decade ago.

For Asean, Mr Ostry said growth is projected to moderate to 4.6 per cent in 2019, after losing momentum in the first half of the year, while picking up to 4.8 per cent in 2020.

China's growth is expected to "decline moderately" to 6.1 per cent for 2019 and 5.8 per cent for 2020, reflecting its ongoing transition to a more sustainable growth model from high speed to high quality growth, as well as negative impact from the US-China trade war, Mr Ostry said. He added the slowdown is being mitigated by a range of macro policy stimulus measures in China.

"The risks to our projection are clearly skewed to the downside. A key risk is a further intensification of trade tensions which could further weigh on confidence, weaken trade, investment and growth," he said.

He added that the main policy priority in the current environment is to address causes of policy uncertainty and to restore reliance on a multilateral trading system that has served the global economy well for decades.