Friday 29 Mar 2024
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SINGAPORE (Jan 3): Based on advance estimates by the Ministry of Trade and Industry, the Singapore economy grew by 1.8% on a year-on-year basis in the fourth quarter of 2016.

This is faster than the 1.2% growth in the previous quarter.

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 9.1%, a reversal from the 1.9% contraction in the preceding quarter.

For the whole of 2016, the economy grew by 1.8%, above MTI’s earlier announced GDP growth forecast of “1.0 to 1.5%”.

“Looking ahead, we maintain our 2017 GDP growth forecast of 1.8% and posit that headwinds in 2017 include slower nominal wage growth, slower employment gains, higher interest rates, and uncertainties from a new Trump administration in the US,” says UOB’s Global Economics & Markets Research team.

“The ‘reflation’ theme is still on our cards as the stronger economic growth joins its hands together with higher inflation expectations. Last month’s release of November consumer price index shows that we may start to experience some inflation in 2017 should the price trends continue.”

According to data released by the ministry this morning, manufacturing sector expanded by 6.5% on a year-on-year basis in the fourth quarter, an improvement from the 1.7 per cent growth in the previous quarter.

Growth was primarily driven by the electronics and biomedical manufacturing clusters, even as the transport engineering and general manufacturing clusters continued to contract.

On a quarter-on-quarter seasonally-adjusted annualised basis, the sector grew by 14.6%, a sharp turnaround from the 8.1% contraction in the third quarter.

The construction sector contracted by 2.8% on a year-on-year basis in the fourth quarter, extending the 0.2% decline in the previous quarter.

The contraction was largely due to the decline in private sector construction activities.

On a quarter-on-quarter seasonally-adjusted annualised basis, the sector shrank by 4.7%, moderating from the 14.8% contraction in the preceding quarter.

Growth in the services producing industries came in at 0.6% on a year-on-year basis in the fourth quarter, slightly faster than the 0.3% growth in the previous quarter. Growth was supported by the “other services industries”, transportation & storage and business services sectors.

On a quarter-on-quarter basis, the services producing industries expanded at an annualised rate of 9.4%, a reversal from the 0.4% contraction in the third quarter.

MTI will release the preliminary GDP estimates for the fourth quarter and the whole of 2016, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in February 2017.

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