SINGAPORE: The Ministry of Trade and Industry (MTI) on Thursday (Nov 23) said the Singapore economy is expected to grow by 3 to 3.5 per cent for 2017, an upward revision from its initial range of 2 to 3 per cent.
It announced this alongside the release of the latest Economic Survey of Singapore, which showed the economy expanded 5.2 per cent in the three months to September compared to a year ago.
This marked the strongest quarterly expansion since 2013. It is also an upward revision from an earlier government forecast of 4.6 per cent and outpaced the 2.9 per cent growth in the preceding quarter.
On a quarter-on-quarter seasonally adjusted basis, gross domestic product (GDP) powered up to 8.8 per cent during the third quarter, also beating official estimates of 6.3 per cent and well above the 2.2 per cent growth in the April-to-June period.
MTI said GDP growth for the third quarter was supported primarily by externally-oriented sectors such as the manufacturing, finance & insurance, wholesale trade and transportation & storage sectors.
Growth in the manufacturing sector, for one, surged by 18.4 per cent year-on-year, much faster than the 8.4 per cent growth in the preceding quarter. All clusters within the manufacturing sector expanded, except the transport engineering cluster.
Taking into account the "better than expected" performance of the Singapore economy in the third quarter, underpinned by stronger external demand, GDP growth in the first three quarters of 2017 came in at 3.5 per cent on a year-on-year basis, MTI said.
The local labour market is expected to "improve slightly" with the pick-up in economic growth, alongside the bump up in hiring during the year-end festive season, said Mr Terence Ho, divisional director of Manpower Planning & Policy division at the Ministry of Manpower.
The Monetary Authority of Singapore (MAS) said its forecast ranges for core and headline inflation remain unchanged. Accordingly, its current neutral policy stance "remains as appropriate", said MAS deputy managing director Jacqueline Loh.
For the rest of the year, the economy is expected to "moderate but remain firm". In particular, the externally-oriented sectors are projected to continue to expand, albeit at a more modest pace, and support growth for the rest of the year.
Domestically-oriented sectors like the health, education & social services sector are also expected to remain resilient.
MTI's revision comes after Prime Minister Lee Hsien Loong said on Sunday that Singapore's economic growth could exceed 3 per cent this year.
ECONOMIC GROWTH FOR 2018 TO BE BETWEEN 1.5 to 3.5%: MTI
Looking ahead into 2018, global growth is expected to pick up marginally on the back of stronger growth in the US and some emerging markets and developing economies, MTI said.
However, growth in several of Singapore’s key external demand markets such as China and the Eurozone is projected to ease in the coming year.
Downside risks remained and they were identified as faster than expected tightening of US monetary policy, as well as elevated global policy uncertainty due to lingering concerns over protectionist sentiment in the US and brewing geopolitical tensions on the Korean peninsula.
Against this external backdrop, MTI expects the economy's pace of growth to "moderate in 2018 as compared to 2017 but remain firm".
The manufacturing sector is likely to continue to expand and provide support to overall GDP growth.
Externally-oriented services sectors, such as wholesale trade, transportation & storage and finance & insurance, are expected to benefit from the global economic recovery. However, their growth momentum may ease in tandem with the moderation in growth in key advanced and regional economies.
Sectors such as information and communications, education, health and social services are likely to remain resilient, supported by domestic drivers of growth like the Smart Nation initiatives and expansions in healthcare facilities respectively.
However, the performance of the construction sector is expected to remain lacklustre, weighed down by the continued weakness in construction demand.
As such, MTI expects the Singapore economy to grow by 1.5 to 3.5 per cent in 2018.
"Barring unexpected outcomes in the global economy and key sectors in the domestic economy, MTI’s central view is that GDP growth in 2018 is likely to come in around the middle of the forecast range," it said.