SINGAPORE: The Singapore economy grew by 3.2 per cent last year, a notch below initial estimates of 3.3 per cent and a moderation from 3.9 per cent in 2017, data from the Ministry of Trade and Industry (MTI) showed on Friday (Feb 15).
Growth is expected to slow for the year ahead, with MTI maintaining its forecast range of 1.5 per cent to 3.5 per cent. Gross domestic product is set to come in slightly below the mid-point of the range.
Advertisement[h=3]READ: Economy will 'continue to grow' this year, challenges ahead: PM Lee in Chinese New Year visit to SATS[/h][h=3]READ: Singapore’s economy to see ‘slower but still firm’ growth for rest of 2018 and next year: MAS[/h]For the final three months of 2018, the economy expanded by 1.9 per cent from a year earlier. This compared with the 2.4 per cent rise in the third quarter and the Government’s earlier estimate of 2.2 per cent.
On a quarter-on-quarter seasonally adjusted basis, GDP grew by 1.4 per cent in the fourth quarter, unchanged from the previous three months but slightly below the 1.6 per cent initially expected.
AdvertisementAdvertisementIn 2018, manufacturing remained as the key growth driver by expanding 7.2 per cent, primarily supported by the electronics, transport engineering and biomedical manufacturing clusters. This, however, marked a slowdown from the 10.4 per cent growth in 2017.
[h=3]READ: Cost of living in Singapore: Slow overall inflation but some pressure points[/h][h=3]READ: EDB forecasts 'sustained' investments of up to S$10 billion in 2019[/h]The services sector, which accounts for two-thirds of the economy, grew by 3 per cent, slightly slower than the 3.2 per cent growth in 2017. Growth was mainly supported by the finance and insurance, business services and wholesale and retail trade sectors.
The construction sector shrank by 3.4 per cent last year – a more modest pace of decline compared to the 10.2 per cent contraction in 2017 – as it continues to be weighed down by a decline in public sector construction works, though private sector construction works rose marginally.
UNCERTAINTIES IN GLOBAL ECONOMY
In its assessment of 2019’s outlook, MTI said growth in most of the key advanced and regional economies is expected to moderate.
Uncertainties and downside risks in the global economy have also increased since three months ago.
[h=3]READ: Commentary: Careful not to humiliate China in trade negotiations[/h][h=3]READ: US and China seek deal to prevent trade-war escalation[/h]For one, there remains the risk of a further escalation in trade conflicts between the US and its key trading partners, which could trigger a sharp fall in global business and consumer confidence. If this happens, global investment and consumption spending would decline, with an adverse impact on global economic growth.
A sharper-than-expected slowdown of the Chinese economy could also adversely affect the region’s growth due to falling import demand from China.
In addition, there is the risk that the UK will leave the EU without a withdrawal agreement.
A “no-deal” Brexit could lead to substantial trade frictions between the UK and its trading partners, as well as weigh on consumer and business sentiments in the UK and EU. This will have potential negative effects on global growth, according to MTI.
“The heightened uncertainties and risks in the global economy have led to a rise in volatility in global financial markets. Should the downside risks materialise, financial market volatility could spike and adversely affect investor sentiments, thereby exacerbating the negative effects on global growth," MTI said.
“Against this external backdrop, the pace of growth in the Singapore economy is expected to slow in 2019 as compared to 2018.”
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