SINGAPORE’S economy expanded 3.6 per cent last year – faster than initial estimates – thanks largely to strong growth in the manufacturing sector.
Growth this year is expected to moderate but remain firm, the The Ministry of Trade and Industry’s (MTI) said on Wednesday.
The Singapore economy, which grew 2.4 per cent in 2016, picked up pace in 2017 on the back of surging global demand for electronic gadgets.
This trade-driven lift helped push 2017 growth above an earlier estimate of 3.5 per cent – which was already more than double initial forecasts.
MTI’s 2017 growth forecast had been progressively upgraded over the year. The official prediction, which was between 1 and 3 per cent in February, stood at between 3 and 3.5 per cent since November.
Government forecasters are tipping growth of 1.5 to 3.5 per cent this year. The MTI expects growth to come in “slightly above the middle of the forecast range”.
This comes as the manufacturing sector, which surged 10.1 per cent in 2017, is likely to continue growing at a brisk clip and supporting the rest of the economy, the MTI said.
In particular, the electronics and precision engineering clusters are projected to sustain a healthy, though more moderate, pace of growth in 2018 on the back of robust global demand for semiconductors and semiconductor equipment.
Externally-oriented services sectors such as finance and insurance, transportation & storage and wholesale trade are also expected to benefit from firm external demand, although their pace of growth is also likely to ease in 2018.
The MTI also expects activity in domestically-oriented sectors like retail and food services to pick up pace on the back of improving consumer sentiments amid the ongoing recovery in the labour market.
However, the construction sector, which shrank by 8.4 per cent last year, is likely to remain lacklustre this year due to weak private sector building activity.
The outlook for the marine and offshore engineering segment is also expected to remain challenging.
The MTI said Singapore’s external demand outlook is likely to be slightly weaker this year compared with last year as the country’s key trading partners enter a more mature phase of recovery.
While risks have receded since 2017, some remain – including concerns over protectionist sentiment and trade policies especially in the United States, as well as higher-than-expected inflation which could prompt the US central bank to raise interest rates more quickly.