SINGAPORE, Aug 10 (Bernama) -- The Singapore economy contracted by 0.7 per cent in the second quarter this year, reversing the 9.5 per cent growth in the previous quarter.
The pull-back in quarter-on-quarter growth was largely due to the decline in the externally-oriented sectors such as electronics manufacturing, wholesale trade and tourism-related services, said the Ministry of Trade and Industry.
The ministry said this would narrow the gross domestic product growth forecast for 2012 from 1.0 to 3.0 per cent to 1.5 to 2.5 per cent.
The republic's economy grew 2.0 per cent on a year-on-year basis in the second quarter of 2012 compared to 1.5 per cent in the preceding quarter, it said in a statement.
On the outlook, the ministry said global economic conditions are expected to remain subdued in the second half of this year.
In advanced economies, consumer spending would be dampened by weak labour market conditions, it said.
Business investment is also expected to remain weak given the ongoing sovereign debt concerns and uncertainties over the fiscal outlook, it said.
The ministry said although domestic demand in emerging Asia would be supported by accommodative policies, growth on the whole would still be hampered by slackening external demand.
Given the macroeconomic backdrop, growth outlook for the Singapore economy remains cautious, it said.
It said externally-oriented sectors, in particular electronics, wholesale and tourism-related services, would be affected by the slowdown in advanced economies.
Continued uncertainties in the external environment would also weigh down on sentiment-sensitive segments within the finance and insurance sectors, it said.
Nonetheless, the ministry said, there would be modest support to growth from healthy expansion in the transport engineering cluster and construction sector.
Uncertainties and downside risks would however continue in the marketplace, it said.
Barring any unforeseen shocks, the Ministry expects the Singapore economy to remain on track, to grow by 1.5 to 2.5 per cent this year.