Singapore's Economy Expands at Fastest Pace in More Than 5 Years

Updated on
  • Manufacturing surges 39.8% as export recovery strengthens
  • Government is forecasting growth of 1% to 3% in 2017

Singapore Economy Expands Driven by Manufacturing

Singapore’s economy grew at its fastest pace in more than five years in the fourth quarter, driven by a surge in manufacturing as export demand recovered.

Key Points

  • Gross domestic product rose an annualized 12.3 percent in the three months to December from the previous quarter, rebounding from a contraction of 0.4 percent, the trade ministry said in a statement Friday
  • That was higher than the government’s January estimate of a 9.1 percent gain and compares with a median forecast of 12.6 percent in a Bloomberg survey of eight economists
  • GDP rose 2.9 percent in the fourth quarter from a year earlier
  • The economy expanded 2 percent in 2016, higher than a previous estimate of 1.8 percent

Big Picture

Singapore, one of Asia’s most trade-dependent nations, is benefiting from a recovery in Chinese demand, with exports and industrial output climbing in the fourth quarter. The outlook is uncertain though because global demand remains weak and the U.S. has threatened to impose trade barriers on countries like China. Singapore’s government is forecasting expansion of 1 percent to 3 percent in 2017 and is embarking on strategies to sustain average growth rates of 2 percent to 3 percent in coming years. That outlook will guide the budget, which Finance Minister Heng Swee Keat will unveil on Monday, and the central bank’s policy review in April.

Experts’ Takeaways

  • “The improved momentum seen in the manufacturing sector towards the end of 2016 is expected to be sustained into 2017, supported by a continued recovery in the global demand for semiconductors and semiconductor equipment,” the Ministry of Trade and Industry said. While world growth is projected to pick up slightly in 2017, “uncertainties and downside risks in the global economy remain,” it said.
  • “If we take a look at the global economic space, global demand space, possibly the U.S. may do a bit better but I don’t think it’s going to be significantly better in that sense and there’s a lot of uncertainty coming out from that country itself,” said Edward Lee, head of Asean economic research at Standard Chartered Plc in Singapore. “Looking closer to Asia, where China is extremely important, compared to last year, it does look like China is going to slow down a bit.” For the full year, Lee said his forecasts are in line with the government’s projection of “modest growth” of 1 percent to 3 percent.

Other Details

  • The services industry, which accounts for about two-thirds of the economy, rose an annualized 8.4 percent in the fourth quarter from the previous three months, led by a 36.5 percent jump in output in the financial services sector
  • Manufacturing surged an annualized 39.8 percent
  • Non-oil domestic exports grew for a third consecutive month in January, expanding 8.6 percent from a year earlier, International Enterprise Singapore said in a separate statement

— With assistance by Myungshin Cho

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