Capital flight threatens Singapore as GDP growth drops to six-year low

Full-year growth will be a measly 1.8%, says DBS.

According to a report by DBS, risks loom as spiked US interest rates coupled with fears of further deceleration in China could send assets and investors scurrying out of and away from the country.

Moreover, Singapore is set to witness the most sluggish growth in GDP in six years. Q3 failed to see any growth, thus leading DBS to posit that the full year GDP is on track to meet the forecast of a 1.8% expansion.

Despite Singapore’s harrowing evasion of a technical recession, the uncertain global environment has cast a shadow on Singapore economy. Domestic restructuring has been proving to be a headache to companies as well, while growth momentum has been lifeless on back of economic headwinds.

DBS further notes that the manufacturing sector in particular has been a disappointment. It’s experienced contractions for the past four quarters in YoY terms, and in three out of the past five on a sequential basis. Moreover, industrial output has nosedived in ten out of the past twelve months and thanks to poor external demand, near-term outlook is not getting brighter.

Meanwhile, DBS asserts that the service sector will continue to grind along. While it will push Singapore economy out of recession’s way, it is also weighed down by manufacturing sector’s weak performance. The local manpower crunch coupled with heightened risks in the global arena have further weighed down the sector.