Singapore shares dip 0.2% after government downgrades 2019 outlook
The country’s trade and industry ministry lowered Singapore's 2019 economic growth estimates to 1.5% – 2.5% from the earlier forecast of 1.5% - 3.5%.
Singapore stocks fell on Tuesday morning, with the Straits Times Index (STI) down by 0.20% or 6.31 points, to 3199.15 as of 9.55am local time, after the country’s trade and industry ministry downgraded Singapore’s 2019 economic growth estimates to 1.5% – 2.5% from the earlier 1.5% - 3.5%.
The down performance of tech stocks on Wall Street overnight also contributed to some weakness to the STI. Chip-related companies that have business dealings with Huawei were among the hardest hit on Wall Street on Monday, after tech-giant Google said it will sever ties with the Chinese company.
Singapore downgrades full-year forecast for 2019
The Ministry of Trade and Industry (MTI) lowered its growth forecast for the year to 1.5% - 2.5% from the earlier 1.5% - 3.5%, in lieu of a weakened global growth outlook that would impact outward-facing sectors in the Singapore economy.
‘The global growth outlook remains clouded by uncertainties and downside risks,’ said the MTI in the economic news release, citing the risk of an escalation of trade tensions between the United States (US) and China. ‘Should this happen and trigger a sharp fall in global business and consumer confidence, investments and consumption could decline, thereby adversely affecting global growth.’
The slower-than-expected growth in the Chinese economy and the tariff impacts it faces from the US could potentially lead to a sharp fall in import demand, which would ‘negatively’ impact the region’s growth, it added.
Meanwhile in the Eurozone, the delay of Britain’s exit from the European Union (EU) until October 31 this year has prolonged economic uncertainty and could further weigh on consumer and business sentiments in the United Kingdom and EU.
Singapore’s first quarter growth came in at a 1.2% year-on-year increase, the MTI said on Tuesday, lower than earlier estimates of a 1.3% growth. Economists had been expecting a 1.5% growth for the three months.
Support came from the services-producing industries and the construction sector, as they expanded by 1.5% and 2.9%, respectively. Singapore’s manufacturing sector meanwhile, sank 0.5% compared to a year ago.
On a quarter-on-quarter basis, the Singapore economy expanded by 3.8% for the first quarter, reversing from the 0.8% contraction in the preceding quarter.
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