SINGAPORE (May 28): RHB Research is turning negative on Singapore’s short-term economic outlook on expectations of a prolonged slowdown in the electronics sector as well as weaker global growth prospects.
As such, the research house is revising its 2019 GDP growth estimate downward to 1.8% from 2.5% previously.
Commenting on the city state’s latest 1Q19 economic data, RHB notes in a report last Thursday that the 1.2% y-o-y expansion of Singapore’s economy came in slightly below the advance estimate and 4Q18 growth of 1.3%, with the manufacturing sector experiencing its first contraction since 1Q16.
It also highlights how the biggest pullback to the sector came from the electronics and precision engineering sub-sectors, which have seen declines in terms of both output and export declines over the latest quarter under review.
Further, the research house is also cautious on the government’s guidance for three major risks in the global economy, namely the escalation of ongoing trade tensions between the US and China; a sharper slowdown in China’s growth; as well as a stronger negative impact from Brexit-related uncertainties.
As such, its GDP forecast has been revised to a narrower 1.5-2.5% range from the previous 1.5-3.5% estimate.
“Judging from a lower-trending PMI, the manufacturing sector is likely to remain in contraction – particularly the sector of electronics and precision engineering. In addition, weaker global demand may also affect the sectors of wholesale trade, transport & storage and finance,” cautions RHB.
