Economy in fast lane, but a rough ride ahead
SINGAPORE'S economy performed much better than expected last year, but the Republic should be prepared for modest growth this year, according to the latest government figures.
The Ministry for Trade and Industry yesterday said that Singapore's economy expanded by 4.1 per cent, higher than the 1.9 per cent growth in the previous year.
This exceeds last month's official flash estimate of 3.7 per cent.
On a quarter-on-quarter seasonally adjusted annualised basis, the economy grew by 6.1 per cent, significantly higher than the 0.3 per cent growth in the previous quarter.
The ministry said this robust performance was driven by growth of 5.5 per cent in the fourth quarter of last year, easing slightly from the 5.8 per cent growth in the preceding quarter.
Manufacturing saw 7 per cent growth on a year-on-year basis, extending the 5.3 per cent growth seen in the previous quarter.
Going forward, the overall economy is expected to "post modest growth" of between 2 and 4 per cent this year.
"Externally oriented sectors such as manufacturing and wholesale trade are likely to continue to recover and provide support to growth, in tandem with the recovery in global demand," the ministry said.
"However, tightness in labour conditions could weigh on growth in some labour-intensive domestically oriented sectors," it added. OCBC economist Selena Ling agreed, saying that the forecasted modest growth could be attributed to a "modest improvement in manufacturing, a sluggish Chinese economy, and domestic challenges of business cost and tight labour markets".
CIMB economist Song Seng Wun said: "Sectors like construction, retail and hospitality could constrain growth...you can't run a restaurant if you can't find workers."
In the fourth quarter of last year, services industries grew 5.9 per cent from a year ago, while the construction sector expanded 4.8 per cent in that quarter, over the previous year.
Barclays Capital economist Leong Wai Ho cautioned that the growth in the finance sector could start to slow due to a slowdown in the property market.
"Exports will continue to recover gradually, but sentiment-sensitive activity will slow down, as real-estate prices correct after an eight-year property boom," he said.