SINGAPORE — Singapore lowered its growth forecast for 2015 because of weakness in manufacturing and said gains will continue to be modest next year even as the global economy improves.
The Ministry of Trade and Industry on Wednesday forecast economic growth in 2015 at "close to 2 percent" and between 1 and 3 percent in 2016. It previously forecast 2015 growth at between 2 and 2.5 percent.
Singapore, a city-state at the tip of peninsula Malaysia, is the wealthiest economy in Southeast Asia but has shifted to lower growth rates in the past decade as other countries including China eroded its traditional strengths in electronics and other manufacturing. It has encouraged investment in higher value industries such as pharmaceuticals and also tried to boost services by opening two casinos, encouraging tourism and becoming a center for private banking.
The ministry said global growth is expected to improve next year but Singapore and other countries in Southeast Asia may not see "significant uplift" in demand for their exports.
China's economic slowdown has dimmed its appetite for imports, growth in the U.S. is driven by service industries, and both China and the U.S. are tending to rely more on domestic manufacturers, it said.
"Against this backdrop, the growth outlook for the Singapore economy in 2016 is modest," the report said.
Singapore's economy grew 1.9 percent from a year earlier in the third quarter, marginally lower than the 2 percent growth in the previous quarter, the ministry said.
"Given the current subdued demand, and the fact that the International Monetary Fund and World Bank have both lowered forecasts, it isn't a surprise that Singapore has followed suit," said Song Seng Wun, an economist at CIMB Private Banking.