Quoteworthy: "It takes its toll on you and those around you." — First Minister of Scotland Nicola Sturgeon resigned on Feb 15 after more than eight years in the role
GDP grew by 3.6% last year; 2023 growth is forecast at 0.5% to 2.5%
Singapore’s GDP grew by 2.1% y-o-y in 4Q2022, moderating from the 4% expansion in the previous quarter. The GDP for the 4Q2022 brings the country’s full-year GDP to 3.6%, down from the Ministry of Trade and Industry’s (MTI) flash estimate of 3.8% and moderating from the 8.9% growth in 2021.
The ministry revised its 2021 estimate upwards from the 7.6% initially released in February last year to account for data updates and revisions from various sources, including the annual sectoral surveys carried out in 2022. However, the full-year GDP was in line with market watchers’ estimates in the Monetary Authority of Singapore’s (MAS) December survey of professional forecasters.
During the last quarter, the manufacturing sector shrank by 2.6% y-o-y due to the output declines in the biomedical manufacturing, chemicals, electronics and general manufacturing clusters. Meanwhile, the construction sector expanded by 10% y-o-y as output for both the public and private sectors improved. The wholesale trade sector grew by 2.4% y-o-y, moderating from the previous quarter’s 4.1%. Growth was mainly due to the machinery, equipment and supplies segment, which was in turn bolstered by the wholesaling of electronic components, telecommunications and computers.
The retail trade sector grew by 5.1% y-o-y due to a robust increase in non-motor vehicle sales volume, outweighing a decline in motor vehicle sales volume. The transportation and storage sector expanded by 2.5% y-o-y, mainly due to the air transport segment as well as expansions in the land and water transport segments. The accommodation sector expanded by 7.8% y-o-y due to a recovery in international visitor arrivals, while the food and beverage (F&B) services sector expanded by 19.6% y-o-y as all segments recorded growth.
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The information and communications sector grew by 5.6% y-o-y due to the information technology (IT) and information services segment, which was, in turn, supported by sustained growth in IT development, consultancy, data hosting and related activities.
The finance and insurance sector contracted by 0.3% y-o-y due to contractions in the banking and insurance segment. The banking segment fell due to lower net fees and commissions and weaker lending activity. The contractions offset the expansions in the other auxiliary activities and fund management segments.
The real estate sector increased by 15.2% y-o-y due to the private residential property segment and the commercial office and industrial space segments. The professional services sector grew by 6.1% y-o-y due to the architectural and engineering, technical testing and analysis, and other professional, scientific and technical services segments. The administrative and support services sector expanded by 10.5% y-o-y due to expansions in the other administrative and support services and rental and leasing segments.
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Other services industries grew by 6% y-o-y with expansions from all segments. The manufacturing sector grew by 2.5% for the full year, slower than the 13.3% growth in 2021. Aside from the chemicals and biomedical manufacturing clusters, all within the sector expanded.
The construction sector posted growth of 6.7%, extending the 20.5% expansion in 2021, supported by both public and private sector construction works, while the services-producing industries also eased to 4.8%, from the 7.6% expansion in 2021. Overall growth for the year was driven mainly by the wholesale trade, manufacturing and other services sectors.
The ministry has kept its growth forecast for 2023 at 0.5% to 2.5%. In a media briefing on Feb 13, Permanent Secretary for Trade and Industry Gabriel Lim says that the city-state’s demand outlook for 2023 has improved “very slightly”, with growth in China projected to pick up in tandem with the faster-than-expected easing of its Covid-19 restrictions which would benefit sectors like tourism and the aerospace industry.
But uncertainties in the global economy remain. “These include the impact of tighter financial conditions across many advanced economies on global growth, as well as the risk of further escalations in the war in Ukraine and geopolitical tensions among major global powers,” says Lim. He adds that the growth outlook of the US and Eurozone economies will weigh on consumption and investment spending in those economies.
Given the broader slowdown in the global economy, MTI expects the growth outlook for other outward-oriented sectors to remain weak. Lim says the semiconductors segment of the electronics cluster is expected to be negatively affected by weaker global semiconductor demand, while the precision engineering cluster is projected to be weighed down by a cutback in capital spending by semiconductor manufacturers. — Felicia Tan and Bryan Wu
Oil market seeing more demand, less supply
The Organization of Petroleum Exporting Countries (OPEC) expects a slightly tighter global oil market than the previous forecast as the group nudged its demand estimate and trimmed its supply outlook.
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OPEC raised its projection for the amount of crude it will need to pump this year by 250,000 barrels a day to an average of 29.42 million a day, it said in a monthly report. Based on OPEC’s current output rates, markets are set to be broadly balanced this year.
The OPEC+ alliance has indicated it plans to stick with production quotas fixed late last year for the rest of 2023, even as China’s economy reopens and Russia cuts output in retaliation for Western sanctions. The United Arab Emirates energy minister reiterated on Feb 14 that world crude markets are balanced as rising demand in some regions is countered by a slowdown elsewhere.
“Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions,” OPEC said. “Concern hovers around the depth and pace of the country’s economic recovery.”
OPEC said that global oil consumption would increase by 2.3 million barrels a day — or 100,000 a day more than projected a month ago — to an average of 101.87 million barrels a day this year. OPEC reduced its estimate for supplies outside the group in 2023 by 150,000 barrels a day to 67 million barrels a day.
OPEC’s 13 members pumped an average of 28.88 million barrels a day in January, little changed from the previous month, the report showed. — Bloomberg
Global Dragon to go private
Property tycoon Koh Wee Meng — via JK Global Wealth — plans to privatise Global Dragon, which he controls, with an offer of 12 cents per share. As at Feb 10, Koh and his related parties already control 81.98% of Global Dragon or some 559.06 million shares.
Koh controls Global Dragon with a stake of 59.3%, or more than 400 million shares held via JK Global Assets. According to the offer document released on Feb 10, JK Global Assets has given an irrevocable undertaking to the offeror, JK Global Wealth.
The second largest shareholder of Global Dragon is Koh’s mother, Tan Su Lan (also known as Tan Soo Lung). Another substantial shareholder is Koh’s sister Ko Lee Meng, the wife of Koh Kian Soon. The latter is the executive chairman of Global Dragon.
According to the DBS, acting on behalf of JK Global Wealth, the offer presents shareholders with an opportunity to realise their investment in Global Dragon at a premium of around 14.3% over its last traded price of 10.5 cents on Feb 7, before the offer was made. The offer price is also a 15.4% premium over the one-month volume-weighted average price and a 17.6% over the corresponding 12-month figure.
As at Dec 31, 2022, the company’s net asset value was 12.18 cents, which implies the 12 cents per share offer price at 0.99 times multiple, and 52.3% higher than Global Dragon’s 3-year historical average of 0.65 times.
As of Feb 10, Global Dragon has two ongoing property projects, and both are landed residential developments. The first along Jalan Daud and the other along Woo Mon Chew Road. Both projects will likely receive their respective TOPs by the end of the current FY2023 ending June 30.
Global Dragon owns 12 999-year leasehold office units in the CBD in its property investment segment, with an average tenancy of 87%. It also has a 194-room hotel along Telok Blangah Road under construction. The hotel is likely to receive its TOP in 1HFY2024 ending December this year.
In October 2021, Koh privatised Fragrance Group, another company he controls. — The Edge Singapore