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Singapore’s GDP Grew by 3.1% in 4th Quarter of 2017

SINGAPORE — The Republic’s economy grew by 3.1 per cent in the fourth quarter of 2017 driven largely by the manufacturing sector, data from the Ministry of Trade and Industry (MTI) showed on Tuesday (Jan 2).

Reuters file photo

Reuters file photo

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SINGAPORE — The Republic’s economy grew by 3.1 per cent in the fourth quarter of 2017 driven largely by the manufacturing sector, data from the Ministry of Trade and Industry (MTI) showed on Tuesday (Jan 2).

While the growth in the final three months of the year was lower than the 5.4-per-cent expansion recorded in the third quarter, it was enough to push the full-year gross domestic product (GDP) growth to 3.5 per cent, as announced by Prime Minister Lee Hsien Loong on Sunday in his New Year message. The 2017 economic growth was more than double the initial forecast, and in the upper end of the government’s revised forecast range of 3 per cent to 3.5 per cent.

On a quarter-on-quarter seasonally adjusted basis, the economy grew 2.8 per cent between October and December, down from 9.4 per cent in the previous quarter.

Across the industries, the manufacturing sector saw the highest growth in the fourth quarter, expanding by 6.2 per cent compared to the same period in 2016. Growth was supported “primarily by robust output expansions in the electronics and precision engineering clusters”, offsetting contraction in the biomedical manufacturing and transport engineering clusters, said MTI.

The manufacturing sector had grown by 38 per cent in the third quarter last year, compared to the same period in 2016. For the whole year, it grew by 10.5 per cent.

The services industry also continued to expanding, growing by 3 per cent in the fourth quarter, and 2.5 per cent for the whole of 2017. The growth ws fuelled by the finance and insurance, wholesale and retail trade, and transportation and storage sectors, MTI said.

Among the country’s three pillars of economic growth, the construction sector continued to languish. It shrunk by 8.5 per cent in the fourth quarter last year due to weakness in private sector construction activities. This is the fourth consecutive quarter of contraction.

For the whole of last year, the sector shrunk by 8.1 per cent. Economists and property analysts said this was due to a decline in public sector construction activity.

While the private property market recovery is expected to be in full swing in 2018, the experts said the impact on the construction sector will lag, and the industry would reap the full benefits some time later.

For example, construction for the redevelopment of collective sale sites — following the spate of en bloc deals sealed last year — is likely to start in the second half of this year, at the earliest, and this hinges on demand from buyers.

Credit Suisse economist Michael Wan said: “The weakness for 2017 construction is due to the lagged impact of the weak property market, together with scaling down of the Downtown Line construction activity as the project nears its final stages.”

He expects the outlook for the sector to improve slightly this year, with work to be ramped up for public infrastructure projects such as the Thomson-East Coast MRT Line. However, this would not be enough to haul the sector’s performance out of negative territory, he noted.

Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants, said that developers will be cautious “since the government had warned of oversupply”. He added: “If take-up (at property launches) is excellent, developers will rush construction. If sales are not as good as expected, developers will pace the construction more gradually.”

UOB economist Francis Tan said there will be an increase in the pipeline of private sector construction projects in 2019, with stronger wage growth expected this year as a result of the better-than-expected economic performance in 2017, among other factors. Mr Tan believes the lag impact means that an upturn in the construction sector will only be seen by the third quarter of 2019, he said.

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