SINGAPORE: Singapore’s economy expanded 2 per cent last year, propped up by a strong showing in the fourth quarter as manufacturing output surged, according to data released by the Ministry of Trade and Industry (MTI) on Friday (Feb 17).
The full-year GDP figure picked up pace slightly from 2015’s 1.9 per cent, which was Singapore’s weakest annual rate of growth since 2009. It was higher than the earlier estimate of 1.8 per cent growth and surpassed the Government’s forecast for 2016 growth to be between 1 and 1.5 per cent this year.
Year on year, gross domestic product (GDP) grew 2.9 per cent over the October to December period, beating the earlier estimate of 1.8 per cent growth and was much faster than the 1.2 per cent growth in the third quarter.
On a quarter-on-quarter seasonally adjusted basis, the economy expanded 12.3 per cent. This was even higher than the 9.1 per cent initially expected and marked a turnaround from the 0.4 per cent contraction in the July to September period, meaning that Singapore averted a technical recession defined as two straight quarters of declines in economic output.
Economic growth in the final quarter of 2016 was largely propped up by a surge in activities in the manufacturing sector, which grew by 11.5 per cent year-on-year on the back of robust growth in the electronics and biomedical manufacturing clusters.
2017 GDP GROWTH FORECAST AT 1% TO 3%
MTI has maintained the GDP growth forecast for 2017 at a modest pace of 1 to 3 per cent, noting that global growth is projected to pick up slightly this year. In particular, growth in the US and key ASEAN economies is expected to improve, even as growth in China continues to moderate, the report said.
However, uncertainties and downside risks in the global economy remain. Apart from political risks such as Brexit, there are signs of a rise in anti-globalisation sentiments and if protectionist approaches become the norm, global trade will be adversely affected leading to knock-on effects on economic growth worldwide. MTI said.
In addition, if monetary conditions tighten further in China and result in a steeper-than-intended pullback in credit, investment spending and hence growth in China could slow down more sharply than expected, the report added.
Against this backdrop, externally oriented sectors such as manufacturing as well as transportation and storage are likely to provide support to growth in the Singapore economy this year. However, the outlook for the construction sector has weakened as fewer contracts were awarded in the last two years amid sluggish private sector demand. Other sectors like marine and offshore, retail and food services are also likely to continue to face headwinds, MTI said.
Mr Loh Khum Yean, Permanent Secretary for Trade and Industry, said the better-than-expected performance of the manufacturing sector in the fourth quarter was a surprise and expects this turnaround in factory output to continue into 2017.
However, Mr Loh noted that the outlook of the rest of the manufacturing and services appears mixed, with sub-segments such as marine and offshore likely to face continued challenges. Given the “mixed and varied picture”, the MTI expects next year’s GDP growth to be “broadly similar” to 2016.