Singapore final GDP seen confirming sluggish Q2 growth

[SINGAPORE] Singapore's latest estimate of second-quarter gross domestic product is likely to confirm sluggish growth in the April-June quarter, with the outlook clouded by concerns over Brexit and weakening global demand.

The median forecast in a Reuters survey of 13 economists predicted that gross domestic product (GDP) in the April-June quarter expanded by 0.8 per cent from the previous three months on an annualised and seasonally adjusted basis.

That would be the same as the government's advance estimate of second-quarter GDP released on July 14.

Economic growth in Singapore is likely to remain slow compared with recent years, said Hayato Nakamura, a senior economist for Bank of Tokyo-Mitsubishi UFJ.

He expects growth to be held back by the "stagnation of global trade", particularly in Asia, as well as high business costs, which have eroded the competitiveness of the city-state's manufacturing sector.

The second quarter economic survey of Singapore, with detailed breakdowns of growth by industry, is set to be released on Thursday, Aug 11 at 8 am local time (0000 GMT).

Year-on-year GDP growth is expected to match the advance estimate of 2.2 per cent, according to the median forecast in the Reuters survey.

Some economists say the government might announce a revised forecast for 2016 growth, after the Monetary Authority of Singapore (MAS) said last month that the official forecast of 1-3 per cent growth was under review.

The growth forecast might be tightened to "about 2 per cent", said Song Seng Wun, an economist for CIMB Private Banking.

MAS managing director Ravi Menon said last month that the central bank's current monetary policy stance remains appropriate and only a marked worsening in the global economy or significant shift to the inflation outlook would prompt a change.

The MAS said it was closely watching risks related to Britain's vote to leave the European Union, the US economic recovery and the slowdown in China.

In April, the MAS unexpectedly eased policy by setting the rate of appreciation of the Singapore dollar's policy band at zero per cent.

REUTERS