Singapore’s Economic Growth Misses Estimates (Bloomberg)

• Manufacturing, construction contracted, while services grew
• GDP to expand above middle of 1.5-3.5% forecast range in 2018

Singapore’s economy lost some of its momentum in the fourth quarter and the government sees growth moderating slightly this year as an export boom in 2017 eases.

• GDP expanded 3.6 percent in the fourth quarter from the same period in 2016; median estimate was for 2.9 percent

While manufacturing in the trade-reliant economy was boosted last year by a surge in electronics exports, output has weakened recently as demand moderated. Even with that easing, the economy posted full-year growth of 3.6 percent in 2017, and is set to expand slightly above the middle of the 1.5-3.5 percent forecast range this year, the trade ministry said.

“The manufacturing sector is likely to continue to expand and provide support to growth in the overall economy,” the ministry said in a statement. “In particular, the electronics and precision engineering clusters are projected to sustain a healthy, though more moderate, pace of growth in 2018.”

The generally robust outlook gives policy makers room to announce expected tax increases in the Feb. 19 budget to help pay for increased spending on health and retirement benefits as the population ages rapidly.

The outlook also gives the Monetary Authority of Singapore scope to tighten policy this year after opening the door to a possible move in their last decision in October. The central bank’s next policy announcement is scheduled for April.

Jacqueline Loh, deputy managing director of the MAS, told reporters on Wednesday that the central bank hasn’t changed core or headline inflation forecasts since October and that the “monetary policy stance remains as announced then.”

The finance and transportation industries are set to benefit from firm external demand this year, and growth will probably broaden out to domestic-focused sectors, such as retail and food services as employment picks up, the ministry said. Construction and the marine and offshore engineering cluster will remain weak in 2018, it said.

Other details from the GDP report:

• Services industry, which makes up about two-thirds of economy, grew annualized 6.3 percent in the fourth quarter from prior three months
• Manufacturing contracted 14.8 percent while construction declined 0.2 percent
• In a separate release, International Enterprise Singapore revised up its forecast for non-oil export growth for this year to 1-3 percent from 0-2 percent previously