DBS has cut its growth rate forecast for Singapore’s economy in 2014, citing service and manufacturing sector weakness, reducing its gross domestic product outlook to 3.0 per cent from a previous 4 per cent.

DBS has cut its growth rate forecast for Singapore’s economy in 2014, citing service and manufacturing sector weakness, reducing its gross domestic product outlook to 3.0 per cent from a previous 4 per cent.

In its latest daily economics outlook, Singapore-headquartered DBS said its forecast cut “came on the back of dismal growth performance in the second quarter”.

In comments that will give cause for concern for the financial sector, DBS said that the services sector of the economy, which traditionally has been its most stable element, is “becoming the biggest risk to the economy”.

Singapore’s GDP contracted in the second quarter of this year for the first time in seven quarters. CIMB, the Asian bank, has said a cut in growth forecasts is likely.

“Growth has been sliding as the existing labour crunch is taking a tool on this relatively more labour-intensive sector. In fact, there is a risk that the services sector continues to slow in the coming quarters owning to the labour crunch,” it said.

The warnings come at a time when the Monetary Authority of Singapore, the jurisdiction’s regulator and central bank authority, has recently sought to curb exposure by banks to the property market. Like its rival business hub, Hong Kong, the jurisdiction has sought to cool a red-hot property market – recent data suggests this has proven quite successful.

In its latest survey of economists’ forecasts, drawn from 23 respondents, the MAS found that respondents expect GDP growth to come out at 3.8 per cent in 2014, unchanged from the previous survey in March.