Singapore's Ministry of Trade and Industry (MTI) announced Friday that its economy shrinked by 0. 7 percent on quarter in the second quarter, reversing the 9.5 percent growth in the previous quarter. On a year-on-year basis, the economy expanded by 2.0 percent, compared to 1.5 percent in Q1.
The quarter-on-quarter contraction mainly due to "the decline in externally-oriented sectors such as electronics manufacturing, as well as wholesale trade and tourism-related services", the ministry said in a statement.
In particular, the manufacturing sector contracted by 0.5 percent on quarter, reversing the 20.8 percent expansion in last quarter. Growth in the electronics cluster remained weak, while the transport engineering and biomedical manufacturing clusters provided growth support, the MTI added.
The wholesale and retail trade sector contracted by an annualized rate of 0.4 percent on quarter, mainly due to the deterioration in the wholesale trade segment.
The construction sector also saw a sharp quarter-on-quarter deceleration from growth rate of 27.9 percent in Q1 to 0.9 percent in Q2, largely due to a slowdown in construction activities in the institutional and others segment.
The growth in visitor arrivals also moderated in recent months, which dragged down the growth rate in accommodation and food services sector from the former 5.4 percent to 3.1 percent in Q2 on a year-on-year basis.
The MTI remained cautious about the city-state's growth outlook, considering the macroeconomic backdrop of dampened consumer demands and weak business investment from the advanced economies.
"Although domestic demand in emerging Asia will be supported by accommodative policies, growth on the whole will still be hampered by slackening external demand," the MTI said.
As a result, the ministry decided to narrow the country's GDP growth forecast for 2012 from 1.0 percent to 3.0 percent, to 1.5 percent to 2.5 percent.
The forecast is consistent with Prime Minister Lee Hsien Loong' s National Day message on Wednesday, during which he said the economy grew by 1.7 percent on year in H1, and the economy is on track for a full-year growth between 1.5 percent to 2.5 percent for 2012./.