Singapore’s GDP forecast to improve in 2017 on slight global economic uptick

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The Singapore economy grew by 2.0% in 2016, similar to the 1.9% growth in 2015, and is expected to expand by 1.0% to 3.0% this year, according to the Ministry of Trade and Industry (MTI).

In 2016, the manufacturing sector grew by 3.6%, a reversal from the 5.1% decline in 2015. Growth was driven primarily by the electronics and biomedical manufacturing clusters, even while transport engineering and general manufacturing continued to contract.

The construction sector expanded by 0.2%, moderating from the 3.9% growth in 2015, as the sector was weighed down by sluggish private sector construction works.

The services producing industries grew by 1.0% in 2016, easing from the 3.2% growth in 2015. Growth was mainly supported by the “other services industries” and the transportation & storage sector.

For 2017, MTI said global growth is projected to pick up slightly. In particular, growth in the U.S. and key ASEAN economies is expected to improve, even as growth in China continues to moderate.

Against this global backdrop and barring the materialization of downside risks such as political uncertainties in the EU and the U.S. and the rise in anti-globalization sentiments, externally oriented sectors such as manufacturing and transportation & storage are likely to provide support to growth in the Singapore economy in 2017.

At the same time, the information & communications and education, health & social services sectors are expected to remain resilient.

On the other hand, the outlook for the construction sector has weakened on the back of the drop in contracts awarded in the last two years, largely due to sluggish private sector demand. Other sectors like the marine & offshore, retail, and food services sectors are also likely to continue to face headwinds.

Taking the above factors into account, the Singapore economy is expected to grow at a modest pace of 1.0% to 3.0% in 2017, said MTI.

In the fourth quarter, meanwhile, the Singapore economy grew by 2.9% year-on-year, faster than the 1.2% growth in the previous quarter. Quarter-on-quarter, the economy expanded by 12.3%, a turnaround from the 0.4% decline in the previous quarter.

The manufacturing sector grew by 11.5% year-on-year, accelerating from the 1.8% growth in the preceding quarter. The strong performance of the sector was primarily due to robust growth in the electronics and biomedical manufacturing clusters.

The construction sector shrank by 2.8% year-on-year, extending the 2.2% contraction in the previous quarter. Growth was weighed down primarily by the decline in private sector construction activities.

The wholesale & retail trade sector grew by 0.4% year-on-year, slightly faster than the 0.1% growth in the third quarter. Growth was supported by the wholesale trade segment, which expanded on the back of a pick-up in oil and non-oil trade. The retail trade segment, on the other hand, registered flat growth.

Growth in the transportation & storage sector came in at 5.4% year-on-year, higher than the 0.7% in the previous quarter. The sector’s growth was largely driven by the water transport and storage & other support services segments, which were in turn supported by an increase in container throughput and containerized cargo handled, respectively.

The accommodation & food services sector recorded a slight contraction of 0.2% year-on-year, a pullback from the 2.5% growth in the preceding quarter. Growth was weighed down by the food services segment, which contracted on the back of weak sales in restaurants.

The information & communications sector posted growth of 1.4% year-on-year, similar to the 1.3% growth in the previous quarter. Growth was supported by the IT & information services segment on the back of healthy demand for IT solutions.

The finance & insurance sector grew by 0.6% year-on-year, faster than the 0.1% growth in the previous quarter. The improved performance was largely due to robust growth in the forex trading and security dealing activities segments.

The business services sector contracted by 1.9% year-on-year, similar to the 1.8%  contraction in the third quarter. The contraction was due to weakness in both the real estate and professional services segments.

Meantime, growth in the “other services industries” improved to 3.9% from 3.6% in the preceding quarter. The sector’s growth was largely driven by the education, health & social services segment.

 

Photo: Hesuruio