This was lower than both the Ministry of Trade and Industry’s (MTI) flash figures of 1.3 per cent growth and a Bloomberg survey of analysts, which expected a 1.4 per cent expansion. It is also the smallest annual expansion for any quarter since April-June 2009, when gross domestic product shrank 1.7 per cent from a year earlier.

The MTI also narrowed downwards its full-year growth forecast to 1.5 to 2.5 per cent, from 1.5 to 3.5 per cent, after “taking into account the performance of the Singapore economy in the first quarter, as well as the weaker external demand outlook”.

The global growth outlook for 2019 has weakened further since the last survey in February, and remains “clouded by uncertainties and downside risks”, the ministry said in its Economic Survey of Singapore released yesterday.

These risks include trade tensions between the United States and China, slower-than-expected growth in the Chinese economy and the delay in Brexit until October 31, resulting in prolonged economic uncertainty.

“With the recent trade actions announced by the US and China, there is a risk of a further escalation of the trade conflicts between the US and its key trading partners, especially China,” said Permanent Secretary for Trade and Industry Gabriel Lim at a media briefing yesterday.

“Should this happen and trigger a sharp fall in global business and consumer confidence, investments and consumption could decline, thereby adversely affecting global growth.”

Growth expectations have weakened for both the US and the euro zone economy as well, and China’s economy is also expected to slow in 2019.

Against this backdrop, manufacturing “is likely to see a sharp slowdown in growth following two years of robust expansion”, especially in the electronics and precision engineering clusters, said the MTI.

But it added that pockets of strength lie in prospects for the information and communications sector, construction, as well as the education, health and social services segment.

Leading growth in the first quarter was the information and communications sector, which expanded by 6.6 per cent year on year, faster than the 5.0 per cent growth in the previous quarter.

“Growth was driven by the IT and information services segment on account of firms’ robust demand for IT and digital solutions,” said the MTI.

Meanwhile, the finance and insurance sector grew by 3.2 per cent and the construction sector grew by 2.9 per cent, a turnaround from the 1.2 per cent decline in the previous quarter and the first quarter of year-on-year growth after 10 consecutive quarters of contraction.

The “other services industries” grew at a faster pace of 2.2 per cent year on year, compared to the 0.3 per cent growth in the previous quarter as well, primarily driven by an expansion in the education, health and social services segment on the back of a continued ramp-up of operations in healthcare facilities.

However, the manufacturing sector contracted by 0.5 per cent year on year, a pullback from the 4.6 per cent growth in the previous quarter. This was due to output declines in precision engineering and electronics, in turn due to weak global semiconductor and semiconductor equipment demand.

Growth in the business services sector eased to 2.3 per cent year on year, the wholesale and retail trade sector shrank by 1.8 per cent, while transportation and storage saw growth of 0.8 per cent. The accommodation and food services sector grew by 1.8 per cent.

“When we talk about the tobacco industry we need to bring in mind: the thousands of farmers, millions of retailers, thousands of employees, thousands of those indirectly work for tobacco, many suppliers and their employees, and all those who benefit from the income generated by the tobacco consumption – all of them will be negatively affected by a tax hike,” JTI Philippines general manager Manos Koukourakis said in a text message to reporters on Monday.

On the other hand, Koukourakis said, “smugglers will benefit because the higher the tax, the higher the benefit due to tax avoidance”.

Earlier, both DOF and the Bureau of Internal Revenue (BIR) admitted that alongside increased excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Act came a proliferation of illicit cigarette trade in the country.

Under the TRAIN Law, the unitary cigarette excise tax has risen to 35 pesos (Bt21.19) per pack since July last year.

But DOF wanted to further increase cigarette excise taxes to at least 60 pesos a pack starting this year, hence lobbying for the approval of Senate Bill (SB) No 1599 sponsored by Sen Manny Pacquiao before the 17th Congress comes to close in three weeks’ time.

However, Koukourakis noted that “countries which raised taxes steeply still suffer the effects of smuggling, government coffers included”.

“Everything looks good short term, but in mid to longer term the consequences are rather dire and we’ve seen it in Malaysia, Thailand, Singapore, Indonesia and so many other places,” he added.

“Currently in the Philippines we have a quite balanced situation where smokers keep ditching the habit, going from 26 million smokers in 2013 down to 16 million in 2018.”

NBC’s Monetary Policy Committee conducted a meeting last Friday and according to its press release issued the same day, it will continue stabilising the currency exchange rate based on actual economic change.

It will also stabilise the interest rate of liquidity-providing collateralised operations (LPCO) and make 800 billion Cambodian riel ($200 million, Bt6.4 billion) a month available for banks and financial institutions to obtain funds through the LPCO.

The committee also committed to continue boosting awareness of riel usage and follow through on enforcement requiring banks and micro-financial institutions to have at least 10 per cent of their total outstanding loans in the local currency.

NBC’s report on the economy in first quarter of this year said macro-economic indicators had shown good progress.

“The inflation rate is low with an average of 1.9 per cent, the exchange rate remains steady at 4,017 riel per USD, and gross foreign reserves continue to increase and are able to ensure the import of goods and services for the next five months,” the release said.

The US recently raised tariffs on $200 billion (Bt6.4 trillion) worth of Chinese products to 25 per cent from 10 per cent and has started the process of slapping tariffs on another $300 billion worth of Chinese goods. China has announced higher tariffs on thousands of US goods in retaliation.

Pham Hai Long, general director of Argex Saigon Foodstuffs JSC, which exports processed foodstuff and seafood to the US and imports feedstock from China, told Nguoi Lao Dong (The Labourers) newspaper: “The depreciation of the Chinese yuan, the appreciation of the US dollar against currencies globally and the strong fluctuations in the USD/VND exchange rate have all affected local exporters. “Vietnam’s export companies benefit from the depreciation of the dong, but if the exchange rate goes up strongly, importers will have to pay high prices, affecting demand, and Vietnamese enterprises are also affected.

“Therefore, the important thing now is for the government not to let it fluctuate too strongly,” he said.

Pham Ngoc Hung, deputy chairman of the Ho Chi Minh City Union of Business Associations, said Vietnam should benefit from the escalation in the trade war, including in terms of exports.

The trend of Chinese and other foreign firms switching their investments from China to other markets, including Vietnam, would provide a fillip to many sectors in Vietnam, he said.

The industrial and commercial property sectors are forecast to grow faster, there would be higher demand for labour and enterprises in supporting industries would get large manufacturers as customers, he said.

But the trick is in actually exploiting these advantages, and strengthening links between local enterprises and foreign investors to build brands for the former’s products and exports, he added.

In a media interview recently, Nguyen Quoc Khanh, chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City, said: “To avoid the impact of the trade war, many Chinese enterprises have shifted their investments to Vietnam, helping boost the development of the woodworking sector.

“But the shift also poses challenges to Vietnamese firms since they will have to encounter fierce competition from the Chinese in many areas, from getting human resources and land to prices.

“Most local firms are still young and lack much experience. This requires Vietnamese firms to make more efforts in their business.”

The association plans to help local firms develop by helping them with training human resources, promoting furniture brands in international markets and seeking customers, he said.

Asked if the increase in Vietnam’s furniture exports to the US could attract higher tariffs, he said: “The US does not want to have a high trade deficit with any country. Our furniture exports to the US can increase further, but our import of machinery and timber from this market has also gone up.

“Currently, Vietnam is the second largest importer of US hardwood in Asia.”

Hung and many companies raised the concern that Chinese manufacturers could ship half-finished products to Vietnam for finishing and exporting to the US under Vietnamese labels. Vietnamese companies should stay alert and not get involved with this, while authorised agencies should closely monitor such activities because if the US detects this, it might impose taxes, they said.

Bukalapak, a tech startup whose valuation of more than US$1 billion (Bt32.5 billion) makes it a rare unicorn company in Indonesia, is the country’s first e-commerce site to be available internationally.

Its BukaGlobal app, which uses Bahasa Indonesia, links four million small and medium-sized enterprises (SMEs) in Indonesia with shoppers in Singapore, Malaysia, Hong Kong, Taiwan and Brunei.

Products sold on the site include health and beauty items, pantry lines and handicrafts.

Bukalapak co-founder and president Fajrin Rasyid said BukaGlobal was designed to address logistical challenges in the region, such as high postage and courier delivery costs.

He told a launch ceremony at the Indonesian Embassy in Singapore, “We want to break down barriers that hinder young and small entrepreneurs from competing on a global playing field, primarily on access, infrastructure and connectivity.”

Fajrin said later that his company chose Singapore and the other four markets to launch BukaGlobal as they matched two criteria: “There are many Indonesians there and the people in these countries understand Indonesian culture.”

BukaGlobal has tied up with Janio, a Singaporean e-commerce logistics startup that began operations last year, to handle shipping.

Janio co-founder and chief operating officer Syed Ali Ridha Madihid said the company’s “robust technolog” in terms of customs clearance and duties possibly helped it seal the deal in March.

Ngurah Swajaya, Indonesia’s ambassador to Singapore, noted, “The strong ties that have been established between Indonesia and Singapore make it the suitable market hub to introduce Indonesian products in the regional market. This could be a proper strategy to advance SMEs’ potential.”

Indonesia’s Minister of Communication and Information Technology, Rudiantara, said BukaGlobal was aligned with his government’s vision to capture the growth of the expanding middle class in the country, where the government is helping eight million SMEs transform their business model.

Putri Wanna, one of several Indonesian vendors at the event, said she hoped to find new customers in Singapore and Malaysia for her coffee and coffee-related products from her hometown of Aceh that she sells under the brands Indo Dealz and Kopi Jumpalitan.

Wanna added, “Hopefully, with BukaGlobal we SMEs have more opportunity to scale up our business.”