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Recession looms in Singapore as trade war weighs on economy: Maybank Kim Eng
[SINGAPORE] Singapore's economy will probably experience a "shallow technical recession" in the third quarter as the global trade outlook worsens, according to Maybank Kim Eng Research.
The escalating US-China trade conflict is weighing on Singapore's export-reliant economy, which Maybank expects will grow 1.3 per cent this year, down from a previous projection of 1.6 per cent and lower than the government's forecast range of 1.5 per cent to 2.5 per cent.
"Disruptions to the supply chain will likely intensify as the trade war broadens to tech and the US imposes export controls on more Chinese tech firms," Maybank economists Chua Hak Bin and Lee Ju Ye said in a note.
The slump in exports has hit manufacturing, which contracted more than expected in May, data on Wednesday showed. The outlook for electronics, which make up 27 per cent of factory output, is particularly weak since US export controls may hit chip makers like Broadcom and Intel, which operate in Singapore, Maybank said.
A recession is defined as two consecutive quarters of negative quarter-on-quarter growth, and if that happens it will increase the chance of the central bank easing monetary policy in October, the economists said.
The Monetary Authority of Singapore, which uses the exchange rate as its main tool, left its policy settings unchanged in April.