Maybank Kim Eng Research says Singapore’s economy will probably experience a “shallow technical recession” in the third quarter as the global trade outlook worsens, Bloomberg has reported.

The escalating U.S.-China trade conflict is weighing on Singapore’s export-reliant economy, which Maybank expects will grow 1.3% this year, down from a previous projection of 1.6% and lower than the government’s forecast range of 1.5% to 2.5%.

“Disruptions to the supply chain will likely intensify as the trade war broadens to tech and the U.S. imposes export controls on more Chinese tech firms,” Maybank economists Chua Hak Bin and Lee Ju Ye said in a note.

The slump in exports has hit manufacturing, which contracted more than expected in May, data on Wednesday showed. The outlook for electronics, which make up 27% of factory output, is particularly weak since U.S. export controls may hit chipmakers like Broadcom Inc. and Intel Corp., which operate in Singapore, Maybank said.

A recession is defined as two consecutive quarters of negative quarter-on-quarter growth, and if that happens it will increase the chance of the central bank easing monetary policy in October, the economists said. The Monetary Authority of Singapore, which uses the exchange rate as its main tool, left its policy settings unchanged in April.

MAS and the Ministry of Trade and Industry are reviewing their growth forecast range for the year and can’t yet say whether it’ll be revised to even lower than the current 1.5%-2.5% estimate, Managing Director Ravi Menon told reporters during the Thursday release of the central bank’s annual report.

A fresh figure will have to wait at least until second-quarter economic data are fully collected through July, Edward Robinson, MAS’s chief economist, said at the same event.