Well I have repeatedly been warning about the growing contagion risks from different dynamics: economic slowdown on multiple fronts (Eurozone, BRICs), political deadlocks (China, Eurozone), deceleration of money supply growth in the US and the continued dithering by central bankers of major economies.
And it seems that one big casualty from these has been Singapore.
From Bloomberg,
Singapore’s economy unexpectedly contracted last quarter as manufacturing fell, adding to signs of a deepening slowdown in Asian expansion as Europe’s debt crisis curbs demand for the region’s goods.
Gross domestic product fell an annualized 1.1 percent in the three months through June from the previous quarter, when it climbed a revised 9.4 percent, the Trade Ministry said in an e- mailed statement today. The median of 14 estimates in a Bloomberg News survey was for a 0.6 percent gain. The economy expanded 1.9 percent from a year earlier.
The Asian Development Bank cut its growth forecast for the region yesterday and South Korea unexpectedly reduced interest rates as it joined countries from Brazil to China in cutting borrowing costs in July. Singapore’s exports declined in May from the previous month, and a shrinking economy could put pressure on the central bank to ease monetary policy, according to Bank of America Corp.
It is important to point out that Singapore is an open economy where the % share of merchandise trade represents more than 300% of GDP
chart from Tradingeconomics.com
The implication is that the unexpected contraction in Singapore’s economy has been a manifestation of a deepening slowdown of economic activities around the world or at least in major economies influenced by the above forces.
Reality has been reasserting dominance against fading hope.
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