GDP growth forecast narrowed to 2.5-3.5 per cent: MTI

SINGAPORE — The Ministry of Trade and Industry (MTI) today (Aug 12) narrowed its full year GDP forecast to 2.5 to 3.5 per cent, from the previous range of 2 to 4 per cent, as the economy feels the brunt of manpower woes even as external conditions continue to improve.

With the US economy set for firmer growth for the rest of this year and China’s outlook stabilising, “the Singapore economy is expected to grow at a modest pace... However, growth in some labour-intensive sectors may be weighed down by labour constraints,” MTI said today when releasing its second quarter economic survey, adding that the escalation of conflicts in oil-producing regions may also lead to oil price hikes and hence growth uncertainties.

Meanwhile, the finalised second quarter growth was 2.4 per cent on-year, down from first quarter’s 4.8 per cent, due to manufacturing’s sharp decline from a 9.9 per cent expansion previously to just 1.5 per cent last quarter as output from the electronis industries contracted.

In the services sector, “finance and insurance expanded by 5.5 per cent on-year in the second quarter, largely similar to the 5.7 per cent recorded in the previous quarter,” MTI said, adding that wholesale and retail trade also grew 1.7 per cent in the same period.

Going forward, these externally oriented sectors will likely be the driver for Singapore’s growth in the second half of 2014, while domestic sectors such as business services and infocomm are also expected to be resilient.

MTI’s latest survey report also revealed that labour productivity saw a 1.3 per cent decline in the second quarter following the first quarter’s 0.9 per cent growth, weighed down by the productivity contraction in domestic sectors such as accommodation, construction and food services.