Singapore authorities narrowed its economic growth forecast for 2014, while cutting the growth forecast for non-oil domestic exports to negative ground, according to official reports released on Tuesday.
The Ministry of Trade and Industry said the economy of Singapore expanded by 2.4 percent year on year in the second quarter, better than the flash estimates of 2.1 percent released last month, but weaker than 4.8 percent growth in the first quarter.
The slowdown was mainly due to weaker manufacturing output. The manufacturing sector grew by 1.5 percent year-on-year in the second quarter, a sharp slowdown from the 9.9 percent expansion in the preceding quarter. The deceleration in growth was largely due to a contraction in electronics output and slower growth in transport engineering output.
Prime Minister Lee Hsien Loong said in a National Day Message earlier that the economy grew by 3.5 percent in the first half of the year, and that the full-year economic growth forecast had been narrowed to between 2.5 and 3.5 percent from between 2 and 4 percent.
On a quarter-on-quarter seasonally-adjusted annualized basis, the economy expanded by 0.1 percent in the second quarter, slower than the 1.8 percent growth in the preceding quarter.
The construction sector grew 4.4 percent, compared to the 6.4 percent growth in the preceding quarter. The slowdown was driven mainly by a fall in private construction output, reflecting weaker private residential building works and a decline in private commercial and industrial building works.
The ministry said the Singapore economy is "expected to grow at a modest pace in 2014." It said the recent incoming data suggest that global economic activities are recovering modestly, following weaker-than-expected global growth in the first quarter.
Externally-oriented sectors such as finance and insurance, and wholesale trade, are likely to support growth in the second half of the year, in tandem with the modest pick-up in the global economy.
Domestically-oriented sectors such as business services and information and communications are also expected to remain resilient in the second half.
"However, growth in some labor-intensive segments such as retail and food services may be weighed down by labor constraints, " it said.
Singapore has been making efforts to restructure and upgrade its economy by putting in place various measures, including the tightening of foreign labor policies.
The Ministry of Trade and Industry said the labor productivity in Singapore fell by 1.3 percent in the second quarter from a year ago, hurt by falling productivity in sectors such as accommodation and food and business services.
Sectors such as finance and insurance and manufacturing saw productivity improvements of 1.6 percent and 1.1 percent, respectively. Sectors with the sharpest declines in productivity were accommodation and food services, business services and construction, with declines of 3.2 percent, 2.7 percent and 2 percent, respectively.
The ministry said short-term productivity data may also reflect cyclical factors related to demand, rather than underlying structural changes that are often observed only over a longer time horizon.
It said there are reasons to believe that productivity will improve moving forward.
"With time, as global economic conditions continue to pick up and our productivity initiatives take effect, we are confident that we will see an uplift to our productivity growth," it said.
Trade promotion agency International Enterprise (IE) Singapore on Tuesday cut its growth forecast for the non-oil domestic exports of the city state to a contraction of between 1 and 2 percent.
The agency had previously projected a growth of between 1 and 3 percent for its non-oil domestic exports (NODX), a key gauge of Singapore's export performance.
Lower shipments of electronic NODX led to a year-on-year decline in the overall NODX by 3.4 percent in the second quarter, following a contraction of 1 percent in the first quarter.
Singapore's NODX to markets such as China, Indonesia and the United States saw gains in the second quarter. However, declines were seen in NODX to markets such as China's Hong Kong, the EU and Thailand.
In the first half of the year, non-oil domestic exports contracted by 2.3 percent year on year, mainly driven by weakness of the electronic sector.
On a year-on-year basis, the domestic exports of electronic products, which accounted for 28.5 percent of the NODX, declined by 13.8 percent in the second quarter, following the decline of 12. 8 percent in the previous quarter.
Total trade in the second quarter grew by 2.9 percent year on year, following a 7.2 percent increase in the previous quarter.
The agency said the full-year NODX is likely to contract by 1 to 2 percent, despite the fact that it expects "a modest improvement" in the NODX in tandem with the gradual pickup in global economic conditions.
The projection for total trade growth is narrowed to between 1. 5 and 2.5 percent./.