SINGAPORE (Jan 2): Singapore’s economy grew by 3.1% on-year over 4Q17, easing from the 5.4% growth reported in the previous quarter, according to the latest advance estimates from the Ministry of Trade and Industry (MTI). 

This brings the economy’s growth to 3.5% for the whole of 2017, in line with MTI’s earlier GDP growth forecast of 3-3.5%.

On a q-o-q seasonally-adjusted annualised basis, the economy expanded at a slower pace of 2.8% compared to the 9.4% registered in the preceding quarter.

The manufacturing sector expanded by 6.2% y-o-y in 4Q, moderating from the 19.2% growth in 3Q.

Its growth was supported primarily by robust output expansions in the electronics and precision engineering clusters, which outweighed output declines in the biomedical manufacturing and transport engineering clusters.

On a q-o-q seasonally-adjusted annualised basis, the sector shrank by 11.5% following its 38% surge in 3Q.

Meanwhile, the construction sector continued to contract by 8.5% y-o-y in 4Q, extending its 7.7% decline in the previous quarter largely due to weakness in private sector construction activities.

Based on a q-o-q seasonally adjusted annualised basis, it shrank by 3.6%, easing from the 5.5% contraction in the precending quarter.

Services producing industries grew by 3% on a y-o-y basis for 3Q, moderating slightly from the 3.2% growth it registered in the previous quarter. Like the previous quarter, growth in this sector was largely supported by the finance & insurance, wholesale & retail trade and transportation & storage sectors.

It expanded by 7.5% on a q-o-q seasonally-adjusted annualised basis, faster than the 3.4% growth registered in 3Q.

The advance GDP estimates for 4Q17 are computed largely from data in Oct and Nov 2017, and are intended as an early indication of the GDP growth in the quarter.

MTI emphasises that these are subject to revision with the availability of more comprehensive data, and that it will release the preliminary GDP estimates for 4Q and the whole of 2017 – including performance by sectors, sources of growth, inflation, employment and productivity – in its Economic Survey of Singapore in Feb 2018.  

Irvin Seah, Economist, DBS Group Research, expects overall GDP growth to moderate to 3% in 2018 on expectations of the economy shifting to a normalise growth path from its recovery stage. 

In his view, today's GDP numbers affirm that the recovery is broadening out, with the services sector turning around to not only prove the largest contributor to Singapore's economy at 69.4% of GDP, but also the most stable engine of growth. 

"Continued improvement in this sector's outlook will ensure a more sustainable growth path for the economy in 2018," says Seah.

A synchronised recovery in key markets such as the US, China and Eurozone should further ensure a conducive environment for trade-dependent economies such as Singapore, he adds. 

"Going forward, growth in the manufacturing sector could ease as global economic conditions normalise amidst a lack of new smartphone product launches ahead, as well as a softer external demand and a tighter global monetary condition... Domestically, the services sector is expected to lead growth in 2018 and pick up the anticipated slack in the manufacturing sector."