Singapore sees economy losing momentum

The economy is set to expand slightly above the middle of the 1.5%-3.5% forecast range this year


SINGAPORE • Singapore’s economy lost some of its momentum in the fourth quarter (4Q) and the government sees growth moderating slightly this year as an export boom in 2017 eases.

Gross domestic product (GDP) rose at a seasonally adjusted, annualised rate of 2.1% from prior three months, Trade Ministry said yesterday; Bloomberg survey median was 2%, while government’s previous projection was 2.8%. GDP expanded 3.6% in 4Q from the same period in 2016; median estimate was for 2.95.

While manufacturing in the trade-reliant economy was boosted last year by a surge in electronics exports, output has weakened recently as demand moderated. Even with that easing, the economy posted fullyear growth of 3.6% in 2017, and is set to expand slightly above the middle of the 1.5%- 3.5% forecast range this year, the Trade Ministry said.

“The manufacturing sector is likely to continue to expand and provide support to growth in the overall economy,” the ministry said in a statement.

“In particular, the electronics and precision engineering clusters are projected to sustain a healthy, though more moderate, pace of growth in 2018.”

The generally robust outlook gives policymakers room to announce expected tax increases in the Feb 19 budget to help pay for increased spending on health and retirement benefits as the population ages rapidly.

The outlook also gives the Monetary Authority of Singapore (MAS) scope to tighten policy this year after opening the door to a possible move in their last decision in October.

The central bank’s next policy announcement is scheduled for April.

Jacqueline Loh, deputy MD of the MAS, told reporters yesterday that the central bank hasn’t changed core or headline inflation forecasts since October and that the “monetary policy stance remains as announced then”.

The finance and transportation industries are set to benefit from firm external demand this year, and growth will probably broaden out to domestic-focused sectors, such as retail and food services as employment picks up, the ministry said. Construction and the marine and offshore engineering cluster will remain weak in 2018, it said.

Other details from the GDP report:
• Services industry, which makes up about two-thirds of economy, grew annualised 6.3% in 4Q from prior three months.
• Manufacturing contracted 14.8% while construction declined 0.2%.
• In a separate release, International Enterprise Singapore revised up its forecast for nonoil export growth for this year to 1%-3% from 0%-2% previously.