Singaporean economic growth likely to have decelerated in Q2 2018

Singapore’s economic growth data for the second quarter is set to be released this week. According to a DBS Bank research report, the advance GDP growth is likely to remain relatively firm at 4 percent year-on-year and 1.2 percent on a sequential basis in the second quarter.

While this is a deceleration from the previous 4.4 percent, the modest easing is a normalization process amidst the peaking of the electronics cycle and higher interest rates. Though the external outlook is becoming increasingly challenging, especially for a trade dependent economy like Singapore, second quarter growth should stay well underpinned by continued recovery in the services sector and resilient showing in the manufacturing sector.

The worst for the construction sector is also over and the drag from that cluster on headline growth will further dispel. However, clouds in the horizon are gathering. Trade tensions between Singapore’s two largest export markets, the U.S. and China, might indirectly impact Singapore.

Tighter liquidity conditions and increasing pressure on regional currencies might also be a drag on inventor sentiment and business sentiments.

“Expectation is for 3Q growth to be the weakest this year, which will also par down consensus expectation for full year growth. Our below consensus forecast of 3.0 percent for 2018 GDP growth remains on track”, added DBS Bank.