Singapore’s slow growth raises recession risk

Singapore is often seen as a bellwether for the health of the global economy, and its slump is evidence that momentum has slowed across Asia. (AFP)
Updated 13 July 2019
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Singapore’s slow growth raises recession risk

  • In the second quarter, manufacturing contracted 3.8 percent from a year earlier after shrinking 0.4 percent in the quarter earlier
  • South Korea may also be flirting with recession, while China may report its slowest growth in 27 years

SINGAPORE: Singapore reported dismal preliminary second quarter growth data on Friday, including the slowest pace of annual expansion in a decade, raising bets that a recession and monetary policy easing could be coming.
The quarter’s 0.1 percent gross domestic product (GDP) expansion was below the 1.1 percent forecast in a Reuters poll and the slowest annual growth since 2009’s second quarter, when it fell 1.2 percent.
The trade ministry also said the economy shrank 3.4 percent on a seasonally adjusted and annualized basis — the biggest contraction in nearly seven years compared with a poll forecast of 0.1 percent growth and January-March’s 3.8 percent expansion.
“It is quite disastrous... way below even the worst street forecasts,” said Selena Ling, head of treasury and strategy at OCBC Bank.
The slump in Singapore — often seen as a bellwether for health of the global economy — is the latest evidence that momentum has slowed across Asia as the year-long US-China trade war and sliding growth weigh on the region’s export-reliant economies.
Elsewhere in Asia, analysts say South Korea may also be flirting with recession, while China on Monday is expected to report its slowest economic growth in at least 27 years.
Ling and others say the main drag for Singapore remains the manufacturing sector.
In the second quarter, manufacturing contracted 3.8 percent from a year earlier after shrinking 0.4 percent in the quarter earlier.
Singapore authorities have previously said they will review their 2019 full-year GDP growth of 1.5-2.5 percent, and some analysts say there might be a recession in 2020.
The standard technical definition of a recession is two consecutive quarters of economic contraction. Ling said she expects authorities to soon lower their full-year growth forecast to 0.5-1.5 percent.

FASTFACT

3.8% - Singapore’s manufacturing contracted 3.8 percent from a year earlier in the second quarter.

Electronics manufacturing output, the main driver of Singapore’s economy in the last two years, declined for the sixth consecutive month in May while exports saw its biggest decline in more than three years.
Khoon Goh of ANZ, who described Singapore’s economy as at a “stand-still” in the second quarter, said in a note that with global trade “still reeling” from trade tensions and broader global slowdown, downside growth risks remain.
In a Reuters poll done after release of the Q2 data, seven of 11 economists said they expect the Monetary Authority of Singapore to loosen its exchange-rate monetary policy in its next policy statement, due in October, with the other four forecasting no change.
Jeff Ng of Continuum Economics, who forecast no change, said “There was a one-in-four chance previously that the MAS will ease. Now, it has increased to 40 percent that they will ease on or before October.”


Huawei in public test as it unveils sanction-hit phone

Updated 19 September 2019

Huawei in public test as it unveils sanction-hit phone

  • Hit by US sanctions, Huawei's Mate 30 will not be allowed to use Google’s Play Store
  • Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
BERLIN: Chinese tech giant Huawei launches its latest high-end smartphone in Munich on Thursday, the first that could be void of popular Google apps because of US sanctions.
Observers are asking whether a phone without the Silicon Valley software that users have come to depend on can succeed, or whether Huawei will have found a way for buyers to install popular apps despite the constraints.
The company has maintained a veil of secrecy over its plans, set to be dropped at a 1200 GMT press conference revealing the Mate 30 and Mate 30 Pro models.
Huawei, targeted directly by the United States as part of a broader trade conflict with Beijing, was added to a “blacklist” in Washington in May.
Since then, it has been illegal for American firms to do business with the Chinese firm, suspected of espionage by President Donald Trump and his administration.
As a result, the new Mate will run on a freely available version of Android, the world’s most-used phone operating system that is owned by the search engine heavyweight.
While Mate 30 owners will experience little difference in the use of the system, the lack of Google’s Play Store — which provides access to hundreds of thousands of third-party apps and games as well as films, books and music — could hobble them.
Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
The tech press reports that this yawning gap in functionality has left some sellers reluctant to stock the new phones, fearing a wave of rapid-fire returns from dissatisfied customers.
Huawei president Richard Yu said at Berlin’s IFA electronics fair this month that his engineers found a “very simple” way to install the hottest apps without going via the Play Store.
Huawei could offer its own app store in a preliminary version, setting itself up as a competitor to the dominant Apple and Google offerings, observers speculate.
Over the longer term, the company could build out a similar “ecosystem” of devices, apps and services as the Silicon Valley companies that would bind users more closely to it.
The world’s second-largest smartphone maker after Samsung, Huawei earlier this month presented its proprietary operating system HarmonyOS, a potential replacement for Android.
The Mate 30 will not yet have HarmonyOS installed.
But it could make for a new round in the decades-old “OS wars” between Microsoft’s Windows and Apple’s Mac OS, then Android versus Apple’s iOS.
Meanwhile, Eric Xu, current holder of Huawei’s rotating chief executive chair, has urged Europe to foster an alternative to Google and Apple.
That could provide an opening for Huawei to build up Europe’s market of 500 million well-off consumers as a stronghold against American rivals.
“If Europe had its own ecosystem for smart devices, Huawei would use it... that would resolve the problem of European digital dependency” on the United States, Xu told German business daily Handelsblatt.
He added that his company would be prepared to invest in developing such joint European-Chinese projects.