Singapore cut its economic growth forecast this year to 1.5 percent, the lower end of the target range, as the economy shrank sharper than previously estimated in the third quarter, the government said Friday.
The Ministry of Trade and Industry also projected tough times ahead in 2013 due to global uncertainties, with growth next year expected at 1.0-3.0 percent.
Gross domestic product (GDP) grew a mere 0.3 percent in the third quarter from the previous year, but shrank 5.9 percent when compared to the previous three months, data from the Ministry of Trade and Industry showed.
The quarter-on-quarter shrinkage was much steeper than the 1.5 percent fall estimated last month.
"The pullback in quarter-on-quarter growth momentum was largely due to the decline in externally-oriented sectors such as manufacturing and wholesale trade," the ministry said.
The manufacturing sector, a key pillar for the trade-driven economy, contracted 9.6 percent quarter-on-quarter, reflecting softer global demand for exports.
"Singapore's economic growth is expected to remain subdued for the rest of 2012. The electronics manufacturing cluster would continue to be weighed down by tepid external demand," the ministry said.
The 2012 growth figure is at the lower end of a 1.5-2.5 percent projection issued by the ministry earlier in the year.
But growth may even come in "slightly lower than forecast if the weakness in the externally-oriented sectors persists", it warned.
GDP growth next year would depend largely on the performances of the US and European economies, Singapore's two major export markets. the ministry said.
"The global economic outlook is still clouded with uncertainties. In particular, there remain concerns over the extent of the fiscal cutback in the US and potential escalation of the ongoing debt crisis in the eurozone," it said.
"Should any of these risks materialise, Singapore's economic growth could come in lower than expected."