Manufacturing and services slowdown could hurt Singapore economy

Global electronics demand have been hit by the US-China trade war.

Singapore economy could face muted growth in Q2 2018 amidst underperforming growth in manufacturing and services, Maybank Kim Eng said.

Manufacturing slowed down its growth to 8.6% from 9.7% in Q1 2018 with the gains mostly coming from electronics and biomedical manufacturing. Despite this, Maybank believes that the sector has been resilient amidst risks from the US-China trade war.

“We expect manufacturing growth to ease to low single-digits in the second half, as global electronics demand taper and businesses reduce capex and production on the back of the US-China trade friction,” Maybank said.

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Meanwhile, the services sector saw a declining growth from 4% in Q1 2018 to 3.4% in Q2 which is the slowest pace in a year. The muted gains was supported by the finance and insurance as well as the wholesale and retail trade sectors.

Maybank also noted that construction growth fell to -4.4% in Q2 from -5.2% in Q1 2018.

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“Construction – despite being hurt by property measures – is still recovering given the strong en bloc sales to date and rising value of contracts awarded,” Maybank said.