SINGAPORE: The full year growth forecast for the Singapore economy has been narrowed to 2 to 3 per cent, from the earlier range of 1 to 3 per cent, said the Ministry of Trade and Industry (MTI) on Friday (Aug 11) as data showed the economy growing quicker than initially thought in the second quarter.
Compared with a year ago, Singapore's gross domestic product (GDP) grew by 2.9 per cent in the three months to June, beating both the previously announced second-quarter advance estimates and first-quarter GDP numbers which showed year-on-year growth of 2.5 per cent.
This meant that the local economy grew 2.7 per cent on a year-on-year basis for the first half of 2017.
On a quarter-on-quarter seasonally adjusted basis, GDP grew by 2.2 per cent during the April-to-June period, way above the earlier estimate of 0.4 per cent growth and reversing from a contraction of 2.1 per cent in the preceding quarter.
The manufacturing sector continued its outperformance to clock robust year-on-year growth of 8.1 per cent in the second quarter. This comes on the back of 8.5 per cent expansion in the previous three months, as the electronics and precision engineering clusters remain buoyed by strong global demand.
On a quarter-on-quarter basis, manufacturing expanded 2.9 per cent, accelerating from the 0.3 per cent growth in the previous quarter.
Looking beyond the manufacturing sector, which has been the key propeller of growth for the past few quarters, certain services sectors such as wholesale & retail trade, finance & insurance, as well as business services, all recorded accelerated year-on-year growth in the second quarter.
This shows that the overall performance of the Singapore economy has "strengthened" and is showing "some signs of broadening" from the manufacturing sector to externally oriented sectors, said MTI permanent secretary Loh Khum Yean.
Still, some unevenness remains. The construction sector, for one, remained in contraction while growth in certain clusters within the manufacturing sector, such as the biomedical manufacturing and transport engineering clusters, continued to be weak, Mr Loh added.
The local labour market is mirroring this divergence in the economy, such as how the weak marine and offshore segment has been a drag on manufacturing employment, said Mr Terence Ho, divisional director of Manpower Planning & Policy division at the Ministry of Manpower.
In line with the economic outlook, the MOM expects the labour market to likely remain modest for the rest of the year.
GLOBAL GROWTH ON TRACK TO BE HIGHER IN 2017: MTI
MTI in its media release said global growth in 2017 is on track to come in higher than last year.
Supporting factors include faster pace of economic growth in the US and the Eurozone.
In Asia, China’s growth is projected to ease slightly in the second half of the year as real investments see a modest slowdown. However, exports are expected to remain robust.
Closer to home, growth in the Indonesian and Malaysian economies is projected to remain resilient for the remaining quarters of the year on the back of healthy domestic demand and a sustained improvement in merchandise exports.
Downside risks continue to linger though the potential impact of these negative factors on growth has eased, compared to three months ago, said MTI. These risks include anti-globalisation sentiments that could adversely affect global trade remain, elevated global political risks and policy uncertainty, faster-than-expected policy tightening in the US as well as the potential of a steeper-than-intended pullback of credit in China.
Against this external backdrop, MTI expects the manufacturing sector to continue to provide support to the Singapore economy in the second half of the year. In particular, the strong performance of the electronics and precision engineering clusters is expected to be sustained into the remaining two quarters on the back of robust global demand for semiconductors and semiconductor-related equipment, although the pace of expansion may moderate given less favourable base effects.
Likewise, externally-oriented services sectors such as transportation & storage, wholesale trade and finance & insurance sectors, are expected to benefit from the pick-up in global trade. The information & communications and education, health & social services sectors are also likely to remain resilient.
On the other hand, the performance of the construction sector is expected to remain lacklustre, weighed down by the continued weakness in private and public sector construction activities.
Taking into account the global and domestic economic environment, MTI said the full-year growth forecast for the Singapore economy has been narrowed upwards to a range of 2 to 3 per cent. Barring unexpected outcomes in the global economy and key sectors in the domestic economy for the rest of the year, MTI added that it expects GDP growth for 2017 to likely to come in at around 2.5 per cent.
Earlier this week, Prime Minister Lee Hsien Loong said in his National Day message that the Government expects the economy to grow around 2.5 per cent for 2017, higher than last year's growth of 2 per cent.