Investing.com -- Singapore’s economy grew less than initially expected in the second quarter, official data showed on Friday, with the government also positing a weaker outlook for 2023 as a manufacturing and export slowdown weighed.
Singapore gross domestic product (GDP) grew just 0.1% in the June quarter from the prior one, lower than initial estimates for growth of 0.3%. The data shows that the economy barely grew in the second quarter after a 0.4% contraction in the first quarter.
Year-on-year, GDP grew 0.5%, lower than initial estimates for growth of 0.7%, and slightly better than the 0.4% growth seen in the prior quarter.
The weaker figures come as the island state grapples with a severe slowdown in manufacturing activity, as well as its key electronics exports. This trend has persisted for over a year, amid worsening economic conditions in major trading partner China.
China is Singapore’s biggest export market, and is struggling to shore up economic growth amid lingering headwinds from the COVID-19 pandemic, as well as a severe cash crunch in the real estate sector.
While Beijing is expected to roll out more stimulus measures, souring sentiment on China spilled over into the outlook for the country’s regional trading partners.
Singapore’s Ministry of Trade and Industry (MTI) slashed its GDP outlook for 2023, with growth now expected between 0.5% and 1.5%, compared to a prior estimate of 0.5% and 2.5%.
“Singapore’s external demand outlook for the rest of the year remains weak. Apart from the expected slowdown in Singapore’s key external demand markets, the global electronics downturn is also likely to be protracted, with a gradual recovery expected towards the end of the year at the earliest,” the MTI said in a statement.
While other aspects of the Singapore economy - namely construction activity and retail trade - expanded through the second quarter, this growth was largely insufficient in offsetting a decline in manufacturing activity.
The island state is also grappling with a growing cost of living, amid rising imports and housing costs. The Monetary Authority of Singapore had hiked interest rates repeatedly over the past year to combat rising inflation.