SINGAPORE — Economic growth in Singapore slowed to 1.3% in the January-March quarter from a year ago due to a slumping manufacturing sector, according to preliminary estimates released on Friday. This makes it the slowest growth since the April-June quarter in 2009 when the country was hit by the global financial crisis.
Also on Friday, the central bank kept its monetary policy unchanged.
Gross domestic product fell short of expectations of 1.5% as compiled by Reuters, and is less than the 1.9% of the October-December quarter.
The manufacturing sector contracted by 1.9%, down from 5.1% growth in the previous quarter.
“The performance of the sector was weighed down by output declines in the precision engineering and electronics clusters, which more than offset output expansions in the biomedical manufacturing and transport engineering clusters,” the Ministry of Trade and Industry said in a statement.
Singapore’s manufacturing sector accounts for about 20% of the economy, with high-tech industries such as semiconductor and precision engineering key pillars of the sector.
Being highly reliant on trade, Singapore has been hit hard by the U.S.-China trade war, which has slowed orders for new exports. Moreover, the slumping smartphone market has weighed on Singapore’s key semiconductor industry.
Official statistics had already signaled signs of a serious downturn in manufacturing for the first quarter of the year. January’s manufacturing output contracted 0.4% from a year earlier, down from 1.8% growth in December.
The World Semiconductor Trade Statistics, a nonprofit organization comprised of companies in the semiconductor industry, also said in February that the global chip market is expected to shrink 3% this year, compared with 13.7% growth in 2018 and 21.6% in 2017.
According to the Department of Statistics, Singapore’s quarterly GDP contracted between the third quarter in 2008 and the second quarter in 2009, after which it grew nonstop. But since last year, as U.S.-China trade tensions simmered, growth slowed. After rising 4.7% in January-March last year, it fell to 4.2% in the second quarter, 2.4% in the third quarter and 1.9% in the fourth quarter.
Meanwhile, as the economy slows, the Monetary Authority of Singapore — the city-state’s central bank — kept monetary policy unchanged in its semiannual policy review, pausing tightening efforts it had implemented twice last year.
Singapore manages monetary policy by moving the exchange rate rather than adjusting interest rates, pegging the Singapore dollar against a basket of currencies of major trading partners. Making the currency appreciate means tightening.
“The growth momentum of the global economy has moderated by more than expected at the turn of the year alongside sluggish trade. Significant uncertainty remains over the short-term outlook,” the MAS said in Friday’s statement.