Manufacturing remains a drag on Singapore’s economy. Source: Wikimedia
Singapore’s economy grew faster than predicted in the fourth quarter of last year, fuelled by construction and services sectors, although manufacturing remained sluggish.
Gross domestic product for the three months rose 5.7 per cent on a seasonally adjusted and annualised basis compared with the previous quarter, according to the Ministry of Trade and Industry predictive estimates. Growth in the third quarter was 1.7 per cent.
A similar level of growth was forecast for the fourth quarter.
GDP rose a revised 1.8 per cent from a year earlier in the third quarter.
Singapore’s economy grew 2.1 per cent across the whole year.
Services output grew 3.2 per cent from a year earlier in the three-month period while the construction sector expanded 2.2 per cent.
Manufacturing output, in contrast, fell 6 per cent from a year earlier in the fourth quarter. It contracted 5.9 per cent in the previous quarter.
Despite a strong fourth-quarter showing, Singapore’s economy grew last year at the slowest rate since the global financial crisis in 2009, according to the ministry’s advance estimates.
Year-on-year, the economy grew by 2 per cent between October and December, compared to 1.8 per cent in the previous quarter. On a seasonally adjusted annualised basis, it expanded by 5.7 per cent quarter on quarter, well above the 1.7 per cent growth in the preceding quarter and the median forecast of 1 per cent growth.
Barclays economist Leong Wai Ho said: “The United States is strong but it is offset by China’s growing weakness, precipitated by a weaker ability to import, thanks to the weaker Chinese yuan.”
DBS senior economist Irvin Seah pointed out the risks of potential capital flight that could result from further US rate hikes and fears of further Chinese slowdown.
“Growth outlook in the next six to nine months will remain tepid before an improvement in the later part of 2016,” he added.
Selena Ling of the Oversea-Chinese Banking Corporation said the data showed Singapore’s economic growth had stabilised since the third quarter of last year and this would be the trend in the first six months of this year.
The economists noted that the 4.8-per-cent contraction in manufacturing for the whole of 2015 was the worst performance since 2001.
UOB economist Francis Tan said: “Although Singapore’s manufacturing sector is not out of the doldrums yet, we remain optimistic that there could be some pick-up in manufacturing growth in 2016.”
Services output grew 3.2 per cent from a year earlier in the three-month period and construction rose by 2.2 per cent, helped by a revival in public-sector construction, while manufacturing output fell 6 per cent from a year earlier. GDP grew by 5.7 per cent in the fourth quarter, up sharply from the 1.7-per-cent growth in the previous quarter.
Analysts noted that GDP grew at its slowest pace in the past six years as China, Singapore’s largest export destination, faced a slump for most of the year. DBS economist Irvin Seah said US interest-rate hikes and a continued slump in China’s economy could hit investor confidence in Singapore in 2016.
“Growth outlook in the next six to nine months will remain tepid before an improvement in the later part of 2016 can be expected,” Seah said.
In November, the Ministry of Trade and Industry announced that the economy was expected to grow at a “modest rate of 1 to 3 per cent” in 2016.
