SINGAPORE (Reuters) - Singapore’s central bank is reviewing its 1.5-2.5% economic growth forecast for this year as the U.S.-China trade war roils the export-dependent economy, its chief, Ravi Menon, said on Thursday.
Singapore’s economy is expected to grow at its slowest pace in a decade this year, and some are predicting a recession in 2020, with the high-tech manufacturing hub more vulnerable to the trade war than others in Southeast Asia.
Recent economic indicators suggest year-on-year economic growth could be weaker in the second quarter than a decade-low 1.2% achieved in the first quarter due to a global slowdown partly caused by trade tensions, Menon said.
“The Singapore economy is in for a rougher ride,” Menon said in a speech that accompanied the release of the Monetary Authority of Singapore’s (MAS) annual report.
“We need to be alert but there is no need to be alarmed.”
The central bank and trade ministry will wait for second quarter growth numbers in July before finalising any revision to the full-year forecast, said MAS chief economist Edward Robinson.
Thailand’s central bank cut its 2019 economic growth forecast on Wednesday, but held interest rates.
A raft of bleak data has prompted economists to raise bets of monetary easing at the MAS’s next semi-annual policy meeting in October, or even earlier if the global growth outlook dims and the U.S. Federal Reserve cuts interest rates.
Menon said its current monetary policy was appropriate, but asked about the prospects for a recession or off-cycle monetary policy moves, he said: “Analysts will come up with a range of possibilities and I wouldn’t rule any of them out.”
However, MAS said later in a statement that it was not considering off-cycle easing and that Menon’s comments referred to possible economic outcomes from the trade and technology conflict between the United States and China.
“It was not in relation to monetary policy easing, and MAS is not considering an off-cycle easing,” the statement said.
“MAS will be carefully monitoring developments, and will take them into account in its assessment of the inflation and growth outlook for the Singapore economy at its next monetary policy review in October.”
Singapore is seen as a potential beneficiary from any capital flight from Hong Kong where a local government plan to allow extraditions of suspects to face trial in China for the first time set off days of street protests.
Menon said there were no signs of “any significant shift of business or funds” from Hong Kong to Singapore and that any upheaval in its rival financial centre in the region could actually be negative for the city-state.
“Prolonged uncertainty in Hong Kong is not good for Singapore,” Menon said. “People tend to see too much through the lens of competition.”
Reporting by John Geddie; Additional reporting by Fathin Ungku; Writing by Joe Brock; Editing by Jacqueline Wong & Shri Navaratnam