News & Articles Strong economic growth for Singapore in fourth quarter
Strong economic growth for Singapore in fourth quarter
4 Jan 2016
SINGAPORE, Jan 4, 2016:
Singapore’s economy posted surprisingly strong growth in the fourth quarter, driven mostly by domestically-focused sectors, which offset weakness in the city-state’s export-oriented industries as Asian economic demand continued to slump.
Gross domestic product expanded by 5.7% in the fourth quarter on an annualised and seasonally adjusted basis, advance estimates from the Ministry of Trade and Industry (MTI) showed today.
That was up from a downwardly revised 1.7% growth in the third quarter, and well above the median forecast of 1.7% growth in a Reuters survey.
The strong headline number was bolstered by construction and services sector activity while manufacturing continued to decline, a sign the economy is being fuelled by local demand rather than external demand, which continues to weaken.
“Even though this number is stronger than expected, it remains sub-potential and that sort of ‘not that great’ growth scenario is present throughout Asia right now,” said Vaninder Singh, an economist for RBS.
Services sector activity grew 6.5% in the fourth quarter while construction rose 7.0%. The manufacturing sector underperformed, shrinking 3.1%.
MTI said construction was supported by a pick-up in public sector building while services industries were helped by the wholesale and retail trade as well as the finance and insurance sectors.
“It’s difficult to generalise that this is a barometer for the rest of Asia,” said Hak Bin Chua, Asean economist for Bank of America Merrill Lynch, adding that there are many domestic components in the services sector.
Services sectors in many other Asian countries are not as developed as they are in Singapore, an established global financial centre, he said.
Economists are cautious on Singapore’s growth outlook given headwinds such as a slowdown in China, the biggest destination for Singapore’s non-oil domestic exports.
China’s factory activity contracted for the 10th straight month in December, a private-sector survey showed today, dampening hopes that the world’s second-largest economy will enter 2016 on steadier footing.
In a sign investors remain unconvinced that the strong growth momentum will be sustained, the Singapore dollar slid to its lowest level in nearly seven weeks today, reversing a very brief rise after the headline GDP release.
The city-state’s benchmark stock index shed 1.3% on a day when Asian stock markets fell broadly.
Full-year growth for 2015 slowed to 2.1% from 2.9% in 2014, in line with the government’s forecast and the weakest performance since 2009, when Singapore’s economy was hit by the global financial crisis and contracted 0.6%.
Growth is expected to remain moderate in 2016, with the government forecasting GDP growth of 1-3%.
Against a backdrop of low inflation and tepid global growth, Singapore’s central bank eased monetary policy twice in 2015. The central bank’s next semi-annual policy review is in April.
“I think for now we don’t expect a change because they already eased twice last year,” said Selena Ling, head of treasury research and strategy for OCBC Bank.
AFP reported that demand for oil drilling rigs has also been dented as exploration activities dwindled due to the prolonged slump in crude prices.
Singapore is the largest manufacturer of jack-up rigs, accounting for 70% of the world market.
“Singapore’s manufacturing sector is still mired in recessionary conditions, reflecting moderating Chinese growth, the broader regional slump in East Asian exports and transmission effects to the industrial supply chain,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight.
Research house Capital Economics also expressed doubt that Singapore’s domestically oriented construction sector can sustain its growth in the face of rising interest rates as the US Federal Reserve continues to tighten monetary policy.
“Higher borrowing costs are likely to further weaken the housing market and dampen construction activity. Rising rates will also crimp consumer spending.”
Prime Minister Lee Hsien Loong had cautioned against the slowing economy in his New Year’s Day message over the weekend.
“Our economy is slowing down and undergoing transition. We cannot expect an easy journey ahead.”
Singapore’s economy posted surprisingly strong growth in the fourth quarter, driven mostly by domestically-focused sectors, which offset weakness in the city-state’s export-oriented industries as Asian economic demand continued to slump.
Gross domestic product expanded by 5.7% in the fourth quarter on an annualised and seasonally adjusted basis, advance estimates from the Ministry of Trade and Industry (MTI) showed today.
That was up from a downwardly revised 1.7% growth in the third quarter, and well above the median forecast of 1.7% growth in a Reuters survey.
The strong headline number was bolstered by construction and services sector activity while manufacturing continued to decline, a sign the economy is being fuelled by local demand rather than external demand, which continues to weaken.
“Even though this number is stronger than expected, it remains sub-potential and that sort of ‘not that great’ growth scenario is present throughout Asia right now,” said Vaninder Singh, an economist for RBS.
Services sector activity grew 6.5% in the fourth quarter while construction rose 7.0%. The manufacturing sector underperformed, shrinking 3.1%.
MTI said construction was supported by a pick-up in public sector building while services industries were helped by the wholesale and retail trade as well as the finance and insurance sectors.
“It’s difficult to generalise that this is a barometer for the rest of Asia,” said Hak Bin Chua, Asean economist for Bank of America Merrill Lynch, adding that there are many domestic components in the services sector.
Services sectors in many other Asian countries are not as developed as they are in Singapore, an established global financial centre, he said.
Economists are cautious on Singapore’s growth outlook given headwinds such as a slowdown in China, the biggest destination for Singapore’s non-oil domestic exports.
China’s factory activity contracted for the 10th straight month in December, a private-sector survey showed today, dampening hopes that the world’s second-largest economy will enter 2016 on steadier footing.
In a sign investors remain unconvinced that the strong growth momentum will be sustained, the Singapore dollar slid to its lowest level in nearly seven weeks today, reversing a very brief rise after the headline GDP release.
The city-state’s benchmark stock index shed 1.3% on a day when Asian stock markets fell broadly.
Full-year growth for 2015 slowed to 2.1% from 2.9% in 2014, in line with the government’s forecast and the weakest performance since 2009, when Singapore’s economy was hit by the global financial crisis and contracted 0.6%.
Growth is expected to remain moderate in 2016, with the government forecasting GDP growth of 1-3%.
Against a backdrop of low inflation and tepid global growth, Singapore’s central bank eased monetary policy twice in 2015. The central bank’s next semi-annual policy review is in April.
“I think for now we don’t expect a change because they already eased twice last year,” said Selena Ling, head of treasury research and strategy for OCBC Bank.
AFP reported that demand for oil drilling rigs has also been dented as exploration activities dwindled due to the prolonged slump in crude prices.
Singapore is the largest manufacturer of jack-up rigs, accounting for 70% of the world market.
“Singapore’s manufacturing sector is still mired in recessionary conditions, reflecting moderating Chinese growth, the broader regional slump in East Asian exports and transmission effects to the industrial supply chain,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight.
Research house Capital Economics also expressed doubt that Singapore’s domestically oriented construction sector can sustain its growth in the face of rising interest rates as the US Federal Reserve continues to tighten monetary policy.
“Higher borrowing costs are likely to further weaken the housing market and dampen construction activity. Rising rates will also crimp consumer spending.”
Prime Minister Lee Hsien Loong had cautioned against the slowing economy in his New Year’s Day message over the weekend.
“Our economy is slowing down and undergoing transition. We cannot expect an easy journey ahead.”
Source: Therakyatpost.com