SINGAPORE, Feb 12 — Singapore's economy is forecast to have expanded less than initially expected in the fourth quarter as factory activity and exports slowed, suggesting the recent moderation in booming sales of electronics could be a drag on growth this year.

A Reuters poll today predicted quarter-on-quarter growth at 2.0 per cent in the October-December period on a seasonally adjusted and annualised basis, slowing from the 2.8 per cent preliminary figure.

From the year earlier, Singapore's fourth quarter final gross domestic product (GDP) was forecast to expand 2.9 per cent, according to the poll's median of 14 economists, below the initial estimate of 3.1 per cent growth.

“Both industrial production and NODX (non-oil exports) contracted over the last quarter likely leading to a sequential contraction in overall growth,” said ANZ bank economists in a research note to its clients.

Still, improvement in domestic demand likely helped support the economy, economists said.

The expected slowdown in fourth quarter GDP growth contrasts with a stellar third quarter when the city state's economy grew at its quickest pace in nearly four years.

Growth in July-September period came in at 5.4 per cent from a year earlier and 9.4 per cent from the prior quarter on an annualised and seasonally adjusted basis.

Manufacturing, exports slow

Manufacturing and exports of electronics, Singapore's main driver of growth in the past year are starting to moderate, analysts say.

In December, Singapore factories posted their biggest on-year output decline in two years, driven by a slump in production while growth in the city-state's hot electronics manufacturing slowed.

In the same month exports growth cooled more than expected, pressured by a decline in electronics sales trade and the first drop in shipments to China in more than a year.

The exports boom has benefited Singapore and other trade-dependent Asian economies in the past year, particularly for makers of electronics products and components such as semiconductors.

At its last semi-annual policy meeting in October, the central bank held monetary policy steady but changed a reference to maintaining current settings for an extended period, a shift that analysts said created room for a tightening this year.

Singapore will announce its 2018 budget next week, with economists expecting a higher goods and services tax to support future social spending. — Reuters