Singapore’s second quarter has seen a significant drop in economic activity, sparking fears that the country could be heading for a recession.
The Singaporean economy is heading towards its weakest economic growth since the global economic crisis in 2009. The country slashed its GDP growth forecast for 2019 to 0%-1%, down from previous estimates of 1.5%-2.5%. The most significant factor in this slowdown is the trade war between the world’s two largest economies, which has only escalated during recent months, according to Singapore’s Ministry of Trade and Industry. Singapore relies heavily on exports, and China is its biggest trading partner. The Chinese economy is currently growing at the slowest pace seen in 27 years.
The Ministry of Trade and Industry has come out saying that it expects “strong headwinds for the rest of the year.” It doesn’t currently look like the trade war will let up anytime soon. Given that the situation has only escalated, the exports and trade services sectors may even fall into technical recession, according to Sian Fenner, senior economist at Oxford Economics.