© Reuters. FILE PHOTO: container cranes are displayed in the port of Singapore
By Fathin Ungku and John Geddie
SINGAPORE (Reuters) – Singapore reported dismal preliminary growth data in the second quarter on Friday, including the slowest pace of annual expansion in a decade, prompting bets that there could be a recession and monetary policy easing.
The expansion of gross domestic product (GDP) of 0.1% in the quarter was below the forecast of 1.1% in a Reuters survey and the slowest annual growth since the second quarter of 2009, when a 1 fell, two%.
The Ministry of Commerce also said that the economy contracted by 3.4% on a seasonally adjusted and annualized basis, the largest contraction in almost seven years compared to a survey forecast of 0.1% growth and the expansion of 3.8% from January to March.
"It's pretty disastrous … way below even the worst street forecasts," said Selena Ling, head of treasury and strategy at OCBC Bank.
The depression in Singapore, often seen as a benchmark for the health of the global economy, is the latest evidence that the momentum has slowed in Asia as the trade war between the United States. UU And China throughout the year weighs on the economies of the region that depend on exports.
Elsewhere in Asia, analysts say South Korea may also be flirting with the recession, while China is expected to report its slower economic growth in at least 27 years on Monday.
Ling and others say that the main obstacle for Singapore is still the manufacturing sector.
In the second quarter, the manufacturing industry contracted 3.8% with respect to the previous year, after having contracted 0.4% in the previous quarter.
Singapore authorities have said earlier that they will revise their 2019 GDP growth for the full year of 1.5% -2.5%, and some analysts say there could be a recession in 2020.
The standard technical definition of a recession is two consecutive quarters of economic contraction.
Ling said he expects authorities will soon reduce their growth forecast for the full year to 0.5-1.5%.
The production of electronic products, the main engine of the economy of Singapore in the last two years, decreased for the sixth consecutive month in May, while exports recorded their largest decline in more than three years.
ECONOMIC & # 39; STILL & # 39;
Khoon Goh of ANZ, who described Singapore's economy as a "stoppage" in the second quarter, said in a note that with global trade "still reeling" from trade tensions and a broader global slowdown, the risks of growth to the downside they continue.
Disappointing second-quarter numbers have more economists expecting the Singapore Monetary Authority, the central bank, to ease its monetary policy based on the exchange rate in its next policy statement, which will come out in October.
"Previously, there was a one in four chance that the MAS would relax, now it has increased to 40% before October," Jeff Ng of Continuum Economics told Reuters.
The ANZ note was titled "We now expect the MAS to ease off in October," and said it expects the MAS to reduce the slope of its political band slightly to 0.5% per year from 1.0%.
ING said that the central bank could very well before October.
"Today's data suggest that waiting would pose a greater risk to the economy, an impending movement, therefore, seems likely," he said in a note.
The MAS adjusted monetary policy twice last year in an effort to control rising price pressures and strengthen its currency, its first movements of this kind in six years.
The Singapore dollar