A muted year end for S'pore economy
SINGAPORE'S economy will enjoy no year-end festive cheer even though third-quarter growth was better than expected.
A patchy global economic showing is set to keep crimping growth here as this year winds down - and the outlook for the new year is also less than celebratory.
The Ministry of Trade and Industry (MTI) yesterday said it expects growth for the full year to come in around 3 per cent this year, down from 3.9 per cent last year.
It expects the economy to expand between 2 per cent and 4 per cent next year.
In the current quarter, sectors depending heavily on trade, such as manufacturing and transport and storage, are likely to be hit by slower growth than in the same period last year.
The construction industry will again be dragged down by weak private-sector building activity, though other locally oriented sectors, such as business services, are likely to "remain resilient", the MTI said.
These forecasts were released alongside the ministry's quarterly Economic Survey of Singapore, a scorecard for the economy's performance.
A surge in the finance and insurance sector and better-than- expected manufacturing output helped the economy grow 2.8 per cent in the July to September period. This was better than the initial estimate of 2.4 per cent.
Non-oil domestic exports grew 1.1 per cent in the third quarter over the same period last year, reverting to growth for the first time since 2012.
Growth in petrochemical exports and pharmaceuticals outweighed a slide in electronics shipments.
Bank of America Merrill Lynch economist Chua Hak Bin noted that third-quarter growth was largely driven by the service sector, which makes up about 70 per cent of the economy.
The manufacturing sector, which contributes about a fifth of total economic output, is still "hurting disproportionately from restructuring and stricter foreign worker policies", he said.
The year is set to end on a lukewarm note, with official estimates tipping growth of only 2.2 per cent in the October to December quarter.
The MTI painted a mixed picture for next year, pointing to signs of recovery in the United States, the world's largest economy, even as other countries struggle to get growth back on track.
The US economy is likely to continue improving on the back of rising domestic demand, the ministry said.
The expected hike in US interest rates next year "would mark the restoration of sustainable growth and be net positive... for small Asian economies like Singapore", said Monetary Authority of Singapore assistant managing director Edward Robinson.
But the pace of recovery in euro zone economies is likely to remain weak, particularly amid concerns about deflation. Also, China's growth is expected to ease further next year on the back of sluggish real estate activity.
There are some bright spots, however, in the form of falling commodity prices.
Oil prices, which have plunged in recent months, are expected to keep falling into next year, said MTI economics division director Yong Yik Wei.
This will help moderate consumer prices here.