In view of analysts at TD Securities, Singapore’s GDP was much worse than expected, falling -3.4% q/q in Q2 (market 0.5%) following 3.8% q/q growth in the previous quarter.
“Growth is barely in positive territory on a y/y basis at 0.1% (market 1.1%) compared to a downwardly revised 1.1% in Q1. The worsening GDP reflects the sharp decline in manufacturing activity as reflected in PMIs, production and exports data.”
“Manufacturing fell at an annualised pace of -6% q/q, construction declined -7.6% q/q and services fell -1.5% q/q. It is highly likely that the government revises lower its 1.5-2.5% growth forecast while the data sets the scene for an easing of policy by MAS in October.”
“We don’t expect a turnaround soon, given the continued pressure on trade and worsening picture in the tech sector. SGD remains closer to the top end of its NEER band but we do not expect its strength to last, with downside risks likely to open up in the weeks ahead.”