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Singapore cautious on outlook after 2017 growth hits 3-year high

SINGAPORE (Reuters) - Singapore is expecting a moderation in economic growth this year, pressured by cooling shipments, after a global exports boom helped the city state clock its fastest expansion in three years in 2017.

FILE PHOTO: Singapore's skyline is seen June 17, 2017. REUTERS/Thomas White/File Photo

Revised figures released by the Ministry of Trade and Industry (MTI) on Wednesday showed that gross domestic product grew 3.6 percent in 2017, the biggest increase since 2014.

The ministry said its central view is for GDP growth in 2018 to come in slightly above the middle of its forecast range of 1.5 to 3.5 percent.

“The pace of growth in the Singapore economy is expected to moderate in 2018 as compared to 2017, but remain firm,” MTI permanent secretary Loh Khum Yean told reporters.

The external demand outlook is expected to be slightly weaker in 2018 compared to last year, the MTI said, adding there were also potential risks arising from U.S. trade protectionism, as well as any faster than expected normalisation in U.S. monetary policy.

Revised figures showed GDP increased 2.1 percent on an annualised basis in the October-December quarter from the previous quarter, down from the initial estimate of 2.8 percent.

The pressure on the economy stemmed from the manufacturing sector, which contracted 14.8 percent in the fourth quarter on a quarter-on-quarter annualised basis.

“2017 was boosted by electronics growth and that can’t last forever,” said UOB economist Francis Tan.

“However, we see a spillover to the services sector which is usually not too volatile in terms of growth rates,” Tan added.

On a year-on-year basis GDP rose 3.6 percent in the fourth quarter, better than the advance estimate of 3.1 percent expansion, but slowing from 5.5 percent growth in the third quarter.

The median forecast in a Reuters poll picked 2.0 percent quarter-on-quarter growth and 2.9 percent year-on-year expansion.


Despite the weaker manufacturing performance in the fourth quarter, the ministry said the sector was likely to expand and support overall economic growth in 2018.

The global exports boom has benefited Singapore and other trade-dependent Asian economies in the past year, though signs of cooling in the city state’s shipments and weaker factory output pointed to a bumpier 2018.

For the whole of 2017, Singapore’s manufacturing grew 10.1 percent, while non-oil domestic exports expanded 8.8 percent. Singapore’s trade agency is expecting slower export growth this year, of 1 to 3 percent.

The Monetary Authority of Singapore’s Deputy Managing Director, Jacqueline Loh, told reporters on Wednesday that the central bank’s monetary policy stance remains unchanged.

In October, the central bank held monetary policy steady but changed a reference to maintaining current settings for an extended period, a shift that analysts said created room for a tightening this year.

Reporting by Masayuki Kitano and Fathin Ungku