Singapore economy slows to 3.2% growth in 2018 as Q4 growth falls to 1.9%: MTI

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The Ministry of Trade and Industry (MTI) in its recent Economic Survey revealed that the Singapore economy grew by 3.2 per cent in 2018. For 2019, MTI has maintained the GDP growth forecast at “1.5 to 3.5 per cent”, with growth expected to come in slightly below the mid-point of the forecast range. 

The Singapore economy grew by 1.9 per cent on a year-on-year basis in the fourth quarter, easing from the 2.4 per cent growth in the third quarter. On a quarter-on- quarter seasonally-adjusted annualised basis, the Singapore economy expanded by 1.4 per cent, unchanged from the preceding quarter. 

The manufacturing sector grew by 5.1 per cent year-on-year, higher than the 3.5 per cent growth in the third quarter. Growth was driven mainly by the biomedical manufacturing, transport engineering and electronics clusters. On a quarter-on- quarter seasonally-adjusted annualised basis, the sector shrank by 2.7 per cent, a reversal from the 0.7 per cent expansion in the preceding quarter. 

The construction sector contracted by 1.0 per cent year-on-year, a more gradual pace of decline as compared to the 2.3 per cent contraction in the third quarter. Output of the sector was weighed down by the weakness in public sector construction works. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector grew by 5.1 per cent, faster than the 0.7 per cent growth in the previous quarter. 

The wholesale & retail trade sector contracted by 0.6 per cent year-on-year, a turnaround from the 1.8 per cent growth in the third quarter, pulled down by the sluggish performance of both the wholesale trade and retail trade segments. The wholesale trade segment shrank on account of declines in the machinery, equipment & supplies and “others”sub-segments. The retail trade segment also contracted, largely due to weak motor vehicle sales. On a quarter-on-quarter seasonally-adjusted annualised basis, the wholesale & retail trade sector shrank by 1.7 per cent, a reversal from the 0.2 per cent growth in the preceding quarter. 

The transportation & storage sector posted growth of 0.5 per cent year-on-year, lower than the 1.9 per cent growth in the third quarter. Growth was largely driven by the air transport segment, which saw improvements in the number of air passengers handled. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector grew marginally by 0.2 per cent, slowing from the 5.1 per cent growth in the previous quarter. 

The accommodation & food services sector expanded by 2.9 per cent year-on-year, moderating from the 4.0 per cent growth in the third quarter. Growth was primarily supported by the accommodation segment, which expanded on the back of higher gross lettings at gazetted hotels in tandem with a 2.4 per cent increase in international visitor arrivals. The food services segment also grew, underpinned by increased sales volumes across all sub-segments, including restaurants, fast food outlets and food caterers. On a quarter-on-quarter seasonally-adjusted annualised basis, the accommodation & food services sector expanded by 2.1 per cent, slower than the 6.7 per cent growth in the previous quarter. 

Growth in the information & communications sector came in at 6.1 per cent year- on-year, faster than the 5.4 per cent recorded in the third quarter. The sector’s growth was mainly supported by the IT & information services segment, which continued to benefit from firms’ robust demand for IT solutions. On a quarter-on- quarter seasonally-adjusted annualised basis, the sector expanded by 10.6 per cent, higher than the 6.6 per cent growth in the preceding quarter. 

The finance & insurance sector grew by 4.1 per cent year-on-year, extending the 3.9 per cent growth in the third quarter. Growth in the sector was largely supported by sustained expansions in the insurance and “others”segments, which were in turn bolstered by resilient demand for insurance services and the structural ramp- up of “new economy” activities such as digital payments respectively. On a quarter- on-quarter seasonally-adjusted annualised basis, the sector expanded at a faster pace of 7.8 per cent, compared to the 3.3 per cent growth in the previous quarter. 

The business services sector recorded growth of 2.8 per cent on a year-on-year basis, easing from the 3.3 per cent growth achieved in the third quarter. Growth was supported by both the professional services and “others” segments, even as the real estate segment continued to contract. On a quarter-on-quarter seasonally- adjusted annualised basis, the sector grew by 2.3 per cent, moderating from the 2.9 growth in the previous quarter. 

The “other services industries” expanded by 1.6 per cent year-on-year, a step-up from the 0.9 per cent growth in the third quarter. Growth was mainly driven by the education, health & social services segment. On a quarter-on-quarter seasonally- adjusted annualised basis, the sector grew at a faster pace of 5.0 per cent as compared to the 1.8 per cent growth in the preceding quarter. 

For the whole of 2018, the Singapore economy grew by 3.2 per cent, a moderation from the 3.9 per cent growth recorded in 2017. 

The manufacturing sector expanded by 7.2 per cent, slowing from the 10.4 per cent growth in 2017. Growth was primarily supported by the electronics, transport engineering and biomedical manufacturing clusters. 

The construction sector shrank by 3.4 per cent, a more modest pace of decline than the 10.2 per cent contraction in 2017. The output of the sector was weighed down by a decline in public sector construction works, even as private sector construction works rose marginally. 

The services producing industries grew by 3.0 per cent, slightly slower than the 3.2 per cent growth in 2017. Growth was mainly supported by the finance & insurance, business services and wholesale & retail trade sectors, which expanded by 5.9 per cent, 3.0 per cent and 1.5 per cent respectively. 

Since November 2018, the external demand outlook for Singapore has weakened slightly. Brexit was also highlighted as potential headwind. In particular, the IMF has revised downwards its 2019 global growth forecast by 0.2 percentage-point to 3.5 per cent, with downgrades to the forecasts for some of Singapore’s key final demand markets such as the Eurozone and ASEAN-5 economies. As compared to 2018, growth in most of the key advanced and regional economies is expected to moderate in 2019.