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Slowest quarter of growth since 2009

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MTI downgrades full-year estimate to between 1.5 to 2.5 per cent

The economy recorded its slowest quarter of growth in nearly a decade on the back of an anaemic manufacturing sector beset by global trade tensions and an electronics slump.

Growth clocked in at just 1.2 per cent for the three months to March 31, prompting the Ministry of Trade and Industry (MTI) to downgrade its full-year estimate.

With exports plunging, projections for the full-year non-oil domestic exports (Nodx) were also marked down.

The economy's showing was the smallest year-on-year growth for any quarter since the second quarter of 2009, when the global financial crisis led to a 1.2 per cent contraction.

The MTI said yesterday that it has narrowed its full-year growth forecast to between 1.5 per cent and 2.5 per cent, down from 1.5 per cent to 3.5 per cent.

Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye said growth in the first quarter came in lower due to the worse-than-expected performance of trade-oriented services, which were hit by slowing global demand and disruptions from the US-China trade war.

Permanent Secretary for Trade and Industry Gabriel Lim said that an escalation in the US-China trade conflict could trigger "a sharp fall in global business and consumer confidence, investments and consumption could decline, thereby adversely affecting global growth".


A bigger cause for concern is how US-China tensions affect confidence globally, and the uncertainty hanging over the global economy.

The uncertainties due to Brexit were also flagged by MTI, which added that the global growth outlook for this year has weakened further since its last survey in February.

Against this backdrop, Enterprise Singapore revised the full-year projected performance of Nodx from 0 per cent to 2 per cent growth to between negative 2 percent and 0 per cent. It fell 6.4 per cent in the first quarter from the same period last year.

Manufacturing is likely to see a sharp slowdown after two years of robust expansion, with electronics and precision engineering hit hard, said MTI.

But there are positive signs in the information and communications sector, construction, education, health and social services.

Finance and insurance, as well as business services, contributed most to first-quarter growth. The construction sector grew 2.9 per cent after 10 consecutive quarters of contraction, while manufacturing shrank 0.5 per cent.

But MTI's report also included a downgrade to last year's figures, which economists say will affect their full-year forecast. Quarter-on-quarter growth for the fourth quarter of last year was revised down from a growth of 1.4 per cent to a contraction of 0.8 per cent - a 2.2 percentage point reversal.

"One can argue that the bounce-back in the first quarter of 2019 (rising 3.8 per cent from the previous) is nothing more than just a technical payback," said DBS senior economist Irvin Seah.

"The trajectory for our full-year 2019 growth forecast has now been lowered significantly."