Singapore teetering again towards recession: OCBC

Technical recession worries return with a vengeance after July's disappointing industrial output.

Singapore’s industrial output disappointed at +1.9% yoy (-9.1% mom) in July, marking the slowest yoy growth in three months, and the sharpest mom contraction since Dec 2010, noted OCBC Treasury Research in its latest monthly viewpoint.

"This suggested that the manufacturing sector is losing steam again and Q3 GDP growth could be finely balanced on a knife’s edge for a technical recession. If Q3 GDP growth falls below 1.5% yoy, we would see flat qoq saar growth," it said.

Meanwhile, OCBC also cited how bank loans growth also slowed for the 7th straight month from 20.9% yoy (1.7% mom) in June to 20.0% yoy (1.3% mom) in July, as business loan growth momentum eased from 25.4% yoy (2.0% mom) to 23.6% yoy (1.2% mom).

"In contrast, consumer loans actually accelerated from 15.2% yoy to 15.4% yoy even though housing loans eased from 15.1% yoy (1.4% mom) to 14.9% yoy (1.3% mom). For Jan-Jul 2012, bank loans growth expanded by 24.2% yoy. Our forecast is for bank loans growth to moderate to around 18% yoy for Q3, but still clock at 21% yoy for the whole of 2012," it added.

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