Singapore is slashing its growth forecast for 2015 after the economy shrank in the second quarter.
It now says the economy will grow 2-2.5 percent this year, down from 2-4 percent previously, Bloomberg reports, citing a statement from the trade ministry.
Gross domestic product fell an annualized 4 percent in the three months to end-June from the previous quarter when it grew a revised 4.1 percent.
That compares with an initial estimate for a 4.6 percent drop, the median forecast in a Bloomberg survey.
“Several key downside risks in the external economic environment remain,” the ministry said.
“The global economy performed weaker than expected in the first half of 2015. For the rest of the year, global growth is expected to pick up gradually, although the pace of growth is likely to be uneven across economies.”
Singapore’s export-dependent economy has been hurt by slowing growth in China while uneven recoveries in the US and Europe have damped overseas demand for Asian goods.
Further volatility in China’s stock market could undermine Chinese spending while financial conditions could tighten more than expected in the region as the U.S. begins to raise interest rates, Monetary Authority of Singapore managing director Ravi Menon said last month.
“We worry that the risk is on the downside,” said Chua Hak Bin, an economist at Bank of America Merrill Lynch in Singapore.
“The main worry is that the economy is still stagnating. There are more indicators to suggest that things are just as distressing as the global financial crisis.”
The government also trimmed its prediction for non-oil domestic export gains to 1-2 percent, from 1-3 percent previously.
Manufacturing contracted an annualized 18.3 percent in the second quarter from the previous three months.
Construction gained 2.9 percent, while services slipped 1.1 percent.
The economy expanded 1.8 percent last quarter from a year earlier, the slowest growth since 2012.
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