SINGAPORE: Singapore’s economic growth surged in the fourth quarter, rising 1.8 percent from a year earlier, handily beating a Reuters forecast for a rise of just 0.6 percent.
On a quarterly basis, gross domestic product (GDP) jumped 9.1 percent, official data showed on Tuesday, compared with a Reuters forecast for 3.7 percent growth. That was up from the third quarter’s contraction of 1.9 percent on-quarter.
For the full year, Singapore’s economy grew 1.8 percent, beating forecasts, but still the lowest since 2009, during the global financial crisis. The government had forecast 2016 GDP growth at 1.0-1.5 percent.
The Singapore dollar had a volatile reaction to the data, with the dollar fetching as much as 1.4518 Singapore dollars immediately after the release, before quickly retracing to around S$1.4492 at 8:09 a.m. HK/SIN, compared with around $1.4498 before the data. Selena Ling, head of treasury research and strategy at OCBC, told CNBC’s “Squawk Box” on Tuesday that the beat was due to strong manufacturing figures.
“Generally, we think that manufacturing is the tide that’s lifting the boat now, because services is slowing down and construction is also softening,” she said. “The November manufacturing numbers were already surprising on the upside, but I think this set of numbers does suggests that manufacturing is seeing a nice bounce.”
The manufacturing sector grew 14.6 percent on-year in the fourth quarter, annualized and seasonally adjusted, compared with the third quarter’s contraction of 8.1 percent on-quarter. Manufacturing expanded 6.5 percent on-year, primarily on the electronics and biomedical segments.
The services sector grew just 0.6 percent on-year in the fourth quarter, slightly up from the third quarter’s 0.3 percent on-year increase. But Ling didn’t hold out much hope that Singapore’s growth would strengthen much ahead.
“The domestic structural challenges are still there. We still have a high cost environment and I think the labor market is softening,” she said. “We have seen the retrenchments as well as the net employment numbers come off a fair bit from the previous years, so I think the belt tightening for the households, it’s ongoing. Even the employers are turning a little bit more cautious.”
Redundancies in the first nine months of the year hit their highest since the first nine months of 2009, during the global financial crisis, government data in December showed.
Economists had turned more bearish on the city-state’s economy recently. The December survey of professional forecasters, sent out in late November, by the city-state’s central bank, the Monetary Authority of Singapore (MAS), found economists had cut their outlook for this year’s growth to 1.4 percent from 1.8 percent in the September survey.
They expected Singapore’s economy would grow just 1.5 percent in 2017 on average, down from the September survey’s forecast for 1.8 percent and the June survey’s projection of 2.1 percent. The latest forecasts for 2017 growth ranged from 0.7 percent to 2.3 percent. The December survey, which had 22 respondents, doesn’t reflect the MAS’ own forecasts.
