Chart of the Day: Check out Singapore’s decelerating services sector in Q2

Declining trade income is spilling over services.

Despite contributing 65% to the city-state’s gross domestic product (GDP), the service sector has been cracking under pressure, registering deceleration in the second quarter of the year with the dipping of trade income.

According to the latest report by Natixis, declining trade activity is feeding through into the service sector with a lag.

“For example, the banking sector is experiencing higher non-performing loan ratios, especially from sectors that serve oil-related firms such as Swiber Holdings Ltd and Ezra Holdings Ltd.,” the report said.

More so, retail sales have also registered sluggish growth.

“The lack of income growth in the trade sector is spilling over to retail sales through weakened confidence in future prospects,” it explained

The Singapore economy has grown 2.1% in the previous quarter on a year-on-year basis, a much higher growth than what the analysts predicted for the said quarter at 2.0%.