LAST_UPDATESat, 23 Jun 2018 10am

Singapore Economy Grows By 3.6 Pct In 2017

SINGAPORE -- Singapore’s economy grew by 3.6 per cent in 2017, faster than the 2.4 per cent growth in 2016.

The Ministry of Trade and Industry (MTI) in a statement said for 2018, it expects Gross Domestic Product (GDP) growth to moderate from that of 2017, but remain firm.

MTI’s central view is for 2018 GDP growth to come in slightly above the middle of the forecast range of “1.5 to 3.5 per cent”.

The Singapore economy grew by 3.6 per cent on a year-on-year basis in the fourth quarter, easing from the 5.5 per cent growth in the third quarter.

On a quarter-on-quarter seasonally-adjusted annualised basis, the Singapore economy expanded by 2.1 per cent, a moderation from the 11.2 per cent growth in the preceding quarter.

For the whole of 2017, the manufacturing sector expanded by 10.1 per cent, accelerating from the 3.7 per cent growth in 2016.

Growth was largely driven by the electronics and precision engineering clusters, even as the biomedical manufacturing, transport engineering and general manufacturing clusters contracted, the MTI said.

The construction sector shrank by 8.4 per cent, a reversal of the 1.9 per cent growth in 2016.

Output in the sector was primarily weighed down by the weakness in private sector construction works, which contracted by 29.1 per cent on the back of a decline in private residential and private industrial works.

The services producing industries grew by 2.8 per cent, higher than the 1.4 per cent growth in 2016.

Growth was mainly supported by finance & insurance, wholesale & retail trade and transportation and storage sectors, which expanded by 4.8 per cent, 2.3 per cent and 4.8 per cent respectively.

On economic outlook for this year, the MTI said since November 2017, the outlook for global growth had improved slightly, with the International Monetary Fund (IMF) upgrading its global growth forecast for 2018 to 3.9 per cent, partly on the back of higher growth expected in the United States due to the recently approved tax reforms.

However, as compared to 2017, growth in most of Singapore’s key final demand markets such as the Eurozone, Japan, newly industrialised economies (NIEs) and ASEAN-5 is projected to moderate or remain unchanged in 2018, it added.

In the US, the MTI said GDP growth is projected to improve further in 2018, supported by domestic demand and fiscal stimulus arising from the recently approved tax reforms, although there are uncertainties around the extent to which investments would respond to the tax reforms.

On the other hand, growth in the Eurozone economy is projected to moderate in 2018, following the rebound seen in 2017.

In Asia, China’s growth is also expected to ease in 2018 on the back of a slowdown in investment, even as consumption is likely to remain stable and provide support to growth.

Meanwhile, growth in the key ASEAN economies is expected to remain firm in 2018, supported by sustained improvements in domestic demand as well as merchandise exports.

On balance, the external demand outlook for Singapore is expected to be slightly weaker in 2018 as compared to 2017.

The MTI noted that the pace of growth in the Singapore economy is expected to moderate in 2018 as compared to 2017, but remain firm, with the manufacturing sector likely to continue expanding and providing support to growth in the overall economy.

In particular, the electronics and precision engineering clusters are projected to sustain a healthy, though more moderate, pace of growth in 2018 on the back of robust global demand for semiconductors and semiconductor equipment.

The externally-oriented services sectors such as finance & insurance, transportation & storage and wholesale trade are expected to benefit from firm external demand, although their pace of growth is also likely to ease in 2018.

Growth is expected to broaden to domestically-oriented services sectors like retail and food services on the back of an improvement in consumer sentiments amidst the on-going recovery in the labour market.

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

However, the performance of the construction sector is likely to remain lacklustre in 2018 as the earlier weakness in construction demand, particularly from the private sector, continues to weigh on construction activities in the sector.

Apart from construction, the MTI said outlook for the marine & offshore engineering segment is also expected to remain challenging, due to weak demand conditions faced by local yards and firms producing oilfield and gasfield equipment, amidst the low oil price environment and excess capacity in the global offshore rig market.