Singapore cautious on outlook after 2017 growth hits three-year high

A man is wheeled across a pedestrian crossing in Singapore January 16, 2018. — Reuters pic
A man is wheeled across a pedestrian crossing in Singapore January 16, 2018. — Reuters pic

SINGAPORE, Feb 14 — Singapore is expecting a moderation in economic growth this year, pressured by cooling shipments, after a global exports boom helped the city state clock its fastest expansion in three years in 2017.

Revised figures released by the Ministry of Trade and Industry (MTI) this morning showed that gross domestic product grew 3.6 per cent in 2017, the biggest increase since 2014.

The ministry said its central view is for GDP growth in 2018 to come in slightly above the middle of its forecast range of 1.5 to 3.5 per cent.

“The pace of growth in the Singapore economy is expected to moderate in 2018 as compared to 2017, but remain firm,” MTI permanent secretary Loh Khum Yean told reporters. The external demand outlook is expected to be slightly weaker in 2018 compared to last year, the MTI said, adding there were also potential risks arising from US trade protectionism, as well as any faster than expected normalisation in US monetary policy.

Revised figures showed GDP increased 2.1 per cent on an annualised basis in the October-December quarter from the previous quarter, down from the initial estimate of 2.8 per cent.

The pressure on the economy stemmed from the manufacturing sector, which contracted 14.8 per cent in the fourth quarter on a quarter-on-quarter annualised basis.

“2017 was boosted by electronics growth and that can’t last forever,” said UOB economist Francis Tan.

“However, we see a spillover to the services sector which is usually not too volatile in terms of growth rates,” Tan added.

On a year-on-year basis GDP rose 3.6 per cent in the fourth quarter, better than the advance estimate of 3.1 per cent expansion, but slowing from 5.5 per cent growth in the third quarter.

The median forecast in a Reuters poll picked 2.0 per cent quarter-on-quarter growth and 2.9 per cent year-on-year expansion.

Export growth seen slowing 

Despite the weaker manufacturing performance in the fourth quarter, the ministry said the sector was likely to expand and support overall economic growth in 2018.

The global exports boom has benefited Singapore and other trade-dependent Asian economies in the past year, though signs of cooling in the city state’s shipments and weaker factory output pointed to a bumpier 2018.

For the whole of 2017, Singapore’s manufacturing grew 10.1 per cent, while non-oil domestic exports expanded 8.8 per cent. Singapore’s trade agency is expecting slower export growth this year, of 1 to 3 per cent.

The Monetary Authority of Singapore’s Deputy Managing Director, Jacqueline Loh, told reporters this morning that the central bank’s monetary policy stance remains unchanged.

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. — Reuters