Twelve months after the United States filed its first indictments against China, there are major disruptions in the global supply chain. Chinese factories report drought from the United States and the spread of the consequences of the war.
The weakest of the financial crisis
Singapore is the first country to present financial statistics for the last quarter. Gross domestic product (GDP) declined 3.4% in the last quarter, following seasonal adjustments made by the Department of Commerce.
It came as a shock. The consensus is for a weak growth of 0.1%, according to Reuters. Adjustments will be made to the growth statistics later on when all the master data is reported. These are the weakest figures for GDP since the end of the financial crisis ten years ago.
Oxford Economics expected a slight decline, but not near the end.
– That's pretty bad. We expected a decline from the previous quarter, as production statistics are weak and the decline in exports. But that was a big mistake, chief economist Cian Fengner said in front of CNBC morning in Asia on Friday.
Sub-statistics show that electronics production has fallen by 3.8% in the second quarter compared to last year. The construction sector declined by 7.6% and the services sector ended by 1.5%. Exports in May dropped mostly for six years.
"These figures are quite disastrous and are far below the worst forecasts," said Selena Ling, director of analysis at the Singapore Bank, OCBC Bank, before Reuters.
– Really ugly
The Singapore authorities recognize that it is difficult to make forecasts for the year. At the beginning of the year there was hope for growth of 3.5%. This is reduced to between 1.5 and 2.5 percent. This may be too optimistic.
"Singapore is really flirting with the recession now," said Fengner of Oxford Economics.
The same comments exist from other professional communities.
Trade wars and petty threats threaten Asian exporters
– I expected the statistics to be bad, but that's really ugly. The rhythm of the technical recession is real. We thought it would not go very deep, but now the risk is that it can go deeper, "said Maybank Kim Eng Research, Macroeconomic Chua Hak Bin, to Bloomberg.
He believes the recession depends on whether the US and China will agree on a trade agreement.
– If there is a recession in October and the US and China still can not find a solution, the central bank is likely to be relieved, Chua says.
Nomuras fears an escalation of the US-China trade war before the end of the year.
"We see the risk of a decline in our growth forecasts, which we have set at 1.7% this year," macroeconomist Euben Parakues wrote in a new report.(General terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like to share our cases through the link that leads directly to our pages. Copying or other forms of use of all or part of the content may only be done after written permission or as permitted by law. For more information, see here.