Chart of the Day: Here's solid proof that Singapore's economy is stagnating

Risks abound in quarters ahead.

Singapore's economy is slowly but surely stagnating, according to this chart by Bank of America Merrill Lynch.

Apart from the extremely lacklustre GDP flash estimate in the second quarter, Singapore is also at risk from internal restructuring and patchy global growth.

“Economy is stagnating, with the risk of a technical recession. Growth in the first quarter was completely surrendered back in the second quarter. A stagnating economy may prompt the government to revisit macroprudential and property measures, but the pain threshold before any change in policy appears to be higher now,” said the report.

Here’s more from BofAML:
The Ministry of Trade & Industry will likely cut and narrow their GDP growth forecast to 2%-3% in August, down from the current 2%-4% forecast, when finalized 2Q GDP is released. Risk is clearly on the downside, and a downgrade to 1.5%-2.5% is possible if June data remains weak.

The global outlook remains challenging and far less positive than the picture MTI painted in April. China’s slowdown, the Greece crisis and weaker growth in the immediate neighborhood – including Indonesia, Malaysia & Thailand – is dampening the outlook. 

Restructuring and stricter foreign worker policies are also hurting growth, including private investment and business expansion. The foreign labor quotas or dependency ratio ceilings came into full effect on 1 July.