Singapore’s economy is predicted to grow by around 3% in 2014, and by 2% to 4% in 2015, according to the Ministry of Trade and Industry (MTI) in its report on the third-quarter GDP results for the city-state.
“The Singapore economy performed slightly better in the third quarter compared to the second quarter of 2014,” noted Ow Foong Pheng, Permanent Secretary at MTI.
She said the economy grew by 2.8% on a year-on-year basis in the third quarter from 2.3% in the preceding quarter. On a quarter-on-quarter basis, expansion was 3.1%, a reversal from the 0.3% decline in the previous quarter.
In the first three quarters of 2014, the economy grew by 3.3% on a year-on-year basis. “For the final quarter of the year, we expect growth in the Singapore economy to ease on a year-on-year basis, in line with a projected slowdown in the global economy,” said Ow.
Externally oriented sectors such as the manufacturing and transport and storage sectors are likely to slow, while growth in the construction sector will continue to be weighed down by the weakness in private sector construction activities. However, domestically oriented sectors like business services are likely to remain resilient.
“Taking into account the above factors, MTI is narrowing the growth forecast for the Singapore economy to around 3% for the whole of 2014, from the earlier forecast of 2.5% to 3.5%,” Ow said.
For 2015, the forecast “remains modest,” as she noted predictions that global growth will pick up only modestly next year, and that recovery will be “uneven across the economies.”
The U.S. economy is expected to improve, supported by domestic demand, while growth in the Eurozone is expected to pick up but at a weak pace. In Asia, China’s growth is expected to ease further in 2015 on the back of sluggish real estate activities. Meanwhile, key ASEAN economies like Malaysia and Indonesia are expected to remain resilient in 2015, supported by healthy investment growth.
She also noted the downside risks to global recovery. In the Eurozone, there are concerns of a deflationary spiral. In the U.S., there are uncertainties over when the Federal Reserve will raise the Fed Funds rate, while China faces the risk of a sharp correction in the real estate market, which could have severe negative spillover effects.
Finally, ongoing geopolitical tensions involving Russia and Ukraine, and key oil producers in the Middle East and North Africa, as well as the possibility of a global Ebola outbreak pose downside risks to the global economy.
“Barring the full materialisation of these downside risks, the Singapore economy is expected to grow by 2.0 to 4.0 per cent in 2015,” said MTI.
Photo: JeCCo
