Singapore’s Ministry of Trade and Industry (MTI) reiterated that the city state is keeping to its GDP growth forecast for 2015.
In an official release on May 26, MTI said it expects the Singaporean economy to grow “at a modest pace of 2 per cent to 4 per cent” amid “significant uncertainties and downside risks” and a global economy that will probably achieve only marginal growth for the year.
The ministry also said the Singaporean economy grew by 2.6% on a year-on-year basis in the first quarter of 2015, faster than the 2.1% growth in the preceding quarter. On a quarter-on-quarter seasonally adjusted annualized basis, the economy expanded by 3.2%, moderating from the 4.9% growth in the preceding quarter.
In arriving at its economic outlook for this year, MTI noted that the pace of global growth is likely to be slow and uneven, with advanced economies expected to see a pickup in growth, and emerging markets and developing economies to see slower growth.
For the advanced economies, it projects the U.S. to see faster growth as compared to 2014, supported by domestic demand. The Eurozone economy is also expected to improve modestly in 2015, supported by the quantitative easing measures that have been implemented since March. However, growth will likely remain modest due to sluggish labor market conditions and deflationary pressures.
In Asia, China’s growth is projected to ease, while growth in most key Association of Southeast Asian Nation economies is likely to improve in 2015 on the back of resilient domestic demand.
At the same time, MTI notes significant uncertainties and downside risks clouding the national outlook. These include the risk of a sharp correction in the real estate market in China, and uncertainties over Greece’s future in the Eurozone, as well as fears of deflation in the EU region. In the U.S., there are lingering uncertainties over the Fed Funds rate and the appreciation of the U.S. dollar and anticipated normalization of U.S. interest rates that could trigger capital outflows from emerging countries and add pressures on their currencies and asset markets.
Meanwhile, for the first three months of the year, MTI said the manufacturing sector contracted by 2.7% year-on-year, extending the 1.3% decline in the previous quarter, primarily due to the decline in the output of the transport engineering, electronics, and biomedical manufacturing clusters.
Growth in the construction sector improved to 3.1% year-on-year, from 0.7% in the previous quarter, supported by a pickup in private sector construction activities.
The wholesale & retail trade sector grew by 4.1% year-on-year, faster than the 0.6% growth in the last quarter. Growth was supported by the wholesale trade segment, which expanded on the back of improvements in non-oil reexports.
The transportation & storage sector rebounded to post growth of 1.5% year-on-year, compared to the 0.4% decline in the previous quarter. The improved performance of the sector was due to the water transport segment, which saw an increase in sea cargo handled.
The accommodation & food services sector turned in a weak performance in the first quarter, contracting by 0.4% year-on-year, compared to the 1.3% growth in the previous quarter. This was largely due to the 6.1% year-on-year decline in visitor arrivals during the same period.
The information & communications sector expanded at a faster pace of 4.6% year-on-year, compared to the 4.4% growth in the previous quarter. Growth of the sector was mainly driven by the IT & technology services segment.
The finance & insurance sector expanded by 7.9% year-on-year, following the 10.3% growth in the preceding quarter. Growth was largely underpinned by the banking cluster, which experienced resilient loans growth and higher net interest margins.
The business services sector grew by 2.8% year-on-year, similar to the 2.9% growth in the previous quarter. Growth was supported by the rental & leasing, other professional, scientific & technical services, and other administrative & support services segments.
The “other services industries” grew by 2% year-on-year, slower than the 2.4% growth in the previous quarter. Growth of the sector was weighed down by the arts, entertainment & recreation segment.
Photo: Eustaquio Santimano
