Skip to Content

Singapore Downgrades Its GDP For 2016

November 23, 2016

General Images Of Singapore's Financial Center As It Overtakes Hong Kong's To be World Number 3General Images Of Singapore's Financial Center As It Overtakes Hong Kong's To be World Number 3
Commercial buildings stand illuminated at night in the central business district of Singapore, on Saturday April 9, 2016. Bloomberg/Getty Images

Singapore downgraded its forecasts on economic growth and exports for 2016 after confirming a contraction in output in the third quarter, raising the risk of a recession amid fresh uncertainty around global trade under U.S. President-elect Donald Trump.

The trade-reliant economy is expected to grow 1.0-1.5% this year, compared with the previous projection of 1.0-2.0%, the Ministry of Trade and Industry said in a statement on Thursday.

The economy shrank 2.0% in the July-September period from the previous three months on an annualized and seasonally adjusted basis, the ministry said.

That compared with the government’s initial estimate on Oct. 14 of a 4.1% contraction and a median forecast of a 2.5% slump in a Reuters’ poll.

The affluent city-state’s economy has been hobbled by dwindling exports amid stubbornly weak global demand, while domestic consumption has also remained anemic with entire floors at some central shopping malls empty.

Non-oil domestic exports are seen falling 5.0-5.5% this year, the trade agency International Enterprise Singapore said in a separate statement, versus a previous forecast of 3.0-4.% contraction.

Activity in the manufacturing sector declined 9.1 percent in the third quarter from the prior three months, the latest data showed, better than an initial estimate of a 17.4% contraction.

The sector’s outlook remained bearish with exports in October sharply down.

The external and domestic headwinds have raised the risk of a recession in Singapore, and heightened the chance of fiscal or monetary stimulus over the near term, analysts said. The central bank held its exchange-rate based policy unchanged in its October meeting, though analysts say a deteriorating growth outlook could force it to ease again at its next review in April 2017.

With Trump’s Nov. 8 election victory and his campaign promise to tear up international trade deals threatening to shatter a fragile global recovery, Singapore‘s open economy remains among some of the most vulnerable markets to U.S. protectionism.

For more on Singapore, watch Fortune’s video:

Services producing industries fell a revised 1.3% in the July-September period, slightly better than the earlier estimate of a 1.9% slide.

Among the services industries, the financial sector shrank 4.7% on-quarter.

Gross domestic product grew 1.1% in the third quarter from a year earlier, the latest government estimate showed, higher than the advance estimate of 0.6% growth and a 1.0% expansion in the Reuters survey.