Singapore slashes yearly growth forecast, stoking recession fears

Singapore slashes yearly growth forecast, stoking recession fears
Singapore’s shrinking annual growth forecast has fueled concerns over the state of the global economy. (Shutterstock)
Updated 13 August 2019

Singapore slashes yearly growth forecast, stoking recession fears

Singapore slashes yearly growth forecast, stoking recession fears
  • Global economic risks including protectionism, Brexit and China-US tariff dispute taking a toll, warns trade ministry

BENGALURU: Singapore slashed its full-year economic growth forecast on Tuesday as global conditions were seen worsening and data confirmed the slowest growth rate in a decade amid mounting fears of recession in the city-state.

The government cut its forecast range for gross domestic product in Singapore — often seen as a bellwether for global growth because international trade dwarfs its domestic economy — to zero to 1 percent from its previous
1.5 percent-2.5 percent projection.
Singapore’s downgrade adds to concerns globally about the effect of increasing protectionism on exports and production. The deterioration in the global outlook has pushed central banks to cut interest rates and consider unconventional stimulus to shield their economies.
“GDP growth in many of Singapore’s key final demand markets in the second half of 2019 is expected to slow from, or remain similar to, that recorded in the first half,” the trade ministry said.
The ministry flagged a host of growing economic risks, including Hong Kong’s political situation, the Japan-Korea trade dispute, the Sino-US tariff war, slowing growth in China and Brexit.
Final second-quarter GDP data on Tuesday showed a 3.3 percent on-quarter contraction on a seasonally-adjusted annualized basis. That was slightly smaller than the 3.4 percent decline seen in the government’s advance estimate but deeper than a
2.9 percent fall predicted in a Reuters poll and a sharp contrast to the robust 3.8 percent first quarter expansion, which was driven by brisk construction activity.
Tuesday’s data also confirmed annual GDP expanded 0.1 percent in April-June from a year earlier, its slowest rate in a decade, and lower than poll expectations of 0.2 percent and the first quarter’s 1.1 percent.
Singapore’s benchmark stock index fell 1.2 percent to a two-month low in early trade, underperforming other bourses in the region.
A central bank official said after the data that it was not considering an off-cycle policy meeting. The next of its scheduled semi-annual meetings is in October, when it is widely expected to ease policy.

HIGHLIGHTS

• Singapore sees 2019 growth at zero to 1 percent.

• Economists fear recession may be around the corner.

• Central bank says it is not considering an off-cycle policy move.

Singapore has been hit hard by the Sino-US trade war, which has disrupted world supply chains in a blow to business investment and corporate profits.
Also on Tuesday, Singapore cut its full-year forecast for non-oil domestic exports to a 9 percent contraction from an 8 percent fall previously. That comes after a 26.9 percent drop in electronics exports in the second quarter year-on-year.
“With trade tensions between the US-China unlikely to abate soon, we expect exports and trade-related services to push the economy into technical recession in Q3,” said Sian Fenner, lead Asia economist at Oxford Economics.
New Zealand, India and Thailand all cut interest rates last week, signalling major concerns about the outlook for economic growth. Last month, the US Federal Reserve cut interest rates for the first time since 2008.
Singapore Prime Minister Lee Hsien Loong said in an annual speech last week that the government stood ready to stimulate the economy.
“It feels like the storm is coming if you look at the whole macroeconomic fundamentals softening,” said Selena Ling,
head of treasury and strategy at OCBC Bank.
“All the downside risks are piling up on one side,” Ling added, pointing to the myriad of global risks flagged in the trade ministry statement.
A faltering economy is expected to crimp growth at Singapore’s three local listed banks, which have so far benefited from improved margins, steady interest rates and loan growth.


Swiss authorities ask Lebanon to cooperate on central bank probe

Swiss authorities ask Lebanon to cooperate on central bank probe
Updated 1 min 26 sec ago

Swiss authorities ask Lebanon to cooperate on central bank probe

Swiss authorities ask Lebanon to cooperate on central bank probe
  • The Swiss attorney general's office said it had requested legal assistance from Lebanon in the context of a probe into "aggravated money laundering"

BEIRUT: Swiss authorities have opened an investigation into money transfers by Lebanon's Central Bank Governor Riad Salame, a Lebanese government official told Reuters on Tuesday.
Salame denied any wrongdoing.
"Both the prime minister and the president are in the loop" on the inquiry which is also looking into Salameh's brother and assistant, said the government official, who asked to remain anonymous.
The Swiss attorney general's office said it had requested legal assistance from Lebanon in the context of a probe into "aggravated money laundering" and possible embezzlement tied to the Lebanese central bank.
But in responding to questions from Reuters, it did not say whether Salameh was a suspect and declined further comment.
Lebanon's crippled banking system is at the heart of a financial crisis that erupted in late 2019. Banks have since blocked most transfers abroad and cut access to dollar deposits.
The meltdown has crashed the currency, prompted a sovereign default and doomed at least half the population to poverty.
In response to Reuters questions about local media reports of a European inquiry, Lebanese Justice Minister Marie Claude Najm said she had received a request for cooperation from Swiss judicial authorities and submitted it to the public prosecutor. She did not elaborate.
A statement by Salameh dismissed any allegations about transfers by him, his brother or assistant as "fabrications". He threatened to sue anyone who spreads them with harmful intent.
A former Merrill Lynch banker, Salameh has led Lebanon's central bank, Banque du Liban, since 1993. The collapse of Lebanon's financial system shook his reputation as a pillar of stability, as foreign donors demanded a central bank audit and Salameh turned into a focus of anger for protesters last year.