Trade war has slowed overall growth in Singapore: MAS head
MAS head says trade woes hurting economy
Escalating trade tensions between the United States and China has hit local manufacturing, trade and investment, and slowed overall growth, said Monetary Authority of Singapore (MAS) managing director Ravi Menon.
Mr Menon told a briefing yesterday: "We are now in the throes of a trade and technology war, and all three engines have indeed stalled."
He said the outlook for the global economy has deteriorated, with the International Monetary Fund revising its growth forecast in April to 3.3 per cent, down from 3.7 per cent.
Global trade volumes fell between October and March while investments have suffered from weakening business confidence, Mr Menon said, adding that manufacturing is in a downturn, with output contracting in about half of the Asian economies, including Singapore.
"If the trade impasse between the US and China drags on and further tariff measures are imposed, growth in the second half of 2019 is likely to be weaker than earlier envisaged," he noted.
Weaker growth will affect Singapore's economic forecast for this year.
Mr Menon pointed out that "the full-year forecast is premised on the economy stabilising in the third quarter of 2019, with a modest pick-up thereafter".
The Trade and Industry Ministry narrowed its full-year growth forecast last month to 1.5 per cent to 2.5 per cent, from 1.5 per cent to 3.5 per cent.
Mr Menon said growth here in the first six months is "looking to be quite weak, particularly in the trade-related sectors".
Singapore's economy grew by 1.2 per cent in the first three months this year compared with 3.1 per cent for the whole of last year.
Mr Menon's comments come as Maybank Kim Eng predicts that the country is headed for a shallow technical recession - two straight quarters of quarter-on-quarter contraction - in the third quarter as the global trade outlook deteriorates.
"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," said Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye in a note.
Mr Menon also addressed recent media assertions that Singapore is gaining from uncertainty in Hong Kong as residents protest against a controversial extradition Bill.
"We have not picked up in the data... and from our engagement with the financial institutions, no signs of any significant shift of business or funds."