Singapore posts slowest annual growth of the decade

  • Economy
  • Friday, 03 Jan 2020

Growth for all of 2019, at 0.7%, was the slowest in a decade. The Singapore dollar was little changed after the release.

SINGAPORE: Singapore’s economic growth slumped in the final months of 2019 as trade-reliant sectors struggled to gain traction despite an easing of US-China tensions.

Gross domestic product rose an annualised 0.1% in the three months through December from the third quarter, according to an advance estimate released yesterday by the Ministry of Trade and Industry. The median forecast in a Bloomberg survey of economists called for 0.4% expansion.

Growth for all of 2019, at 0.7%, was the slowest in a decade. The Singapore dollar was little changed after the release.

The data show that while “manufacturing momentum remains in the doldrums, nevertheless services and construction are likely to continue being the bright spots into 2020, ” said Selena Ling, head of research and strategy at Oversea-Chinese Banking Corp in Singapore.

Key insights

One of the most export-reliant economies in the world, Singapore’s growth prospects depend greatly on the outlook for global trade and demand, which remain relatively subdued. Prime Minister Lee Hsien Loong said in a New Year’s message that the economy was growing “less vigorously” than officials would like, with US-China tensions likely to continue. The Monetary Authority of Singapore eased monetary policy in October for the first time since 2016, saying the economy still faced external risks even as it narrowly avoided a recession in the third quarter.

Economists’ views

“We are cautiously optimistic that global macro stabilisation anchored by the expected completion of the US-China Phase One trade deal could lead to improvement in the global economic backdrop for next year, which could give Singapore’s manufacturing and export sectors the necessary boost for 2020, ” United Overseas Bank economist Alvin Liew said in a Dec 26 research note.“Our 2020 GDP growth forecast for the Singapore economy remains at 1%-2% year-on-year, predicated on a modest manufacturing recovery with the services and construction sectors as providing the growth bulwark, ” OCBC’s Ling said in a Dec 26 note.

“Since global monetary policy accommodation appears to have largely run its course for now, the onus will turn to fiscal policy stimulus to come to the rescue of tepid demand conditions.”

GDP rose 0.8% in the fourth quarter from a year earlier. Advance GDP estimates are computed largely from data in the first two months of the quarter, and often are revised once the full quarter’s data are available. Manufacturing fell 7.3% in the fourth quarter compared to the third, construction grew 2.1%, and services gained 2.4%. — Bloomberg

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