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Singapore economic growth slows to 3.2% in 2018

A view of Sentosa island and the skyline of the central business district in Singapore. (Photo: Reuters/Edgar Su)
A view of Sentosa island and the skyline of the central business district in Singapore. (Photo: Reuters/Edgar Su)

The Singapore economy grew by 3.2 per cent in 2018, lower than an initial estimate of 3.3 per cent, and slowing down from the 3.9 per cent growth in 2017.

Prime Minister Lee Hsien Loong in his New Year message said the economy grew 3.3 per cent in 2018.

The economy expanded by 1.9 per cent on a year-on-year basis in the fourth quarter, easing from the 2.4 per cent in the third quarter, according to a statement from the Ministry of Trade and Industry on Friday (15 February). The latest figures were adjusted from the government’s initial estimates released on 2 January that showed the economy grew by 2.2 per cent in the October to December period.

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew 1.4 per cent in the fourth quarter, down from the initial estimate of 1.6 per cent.

The manufacturing sector expanded by 5.1 per cent year-on-year in the fourth quarter, faster than the 3.5 per cent growth in the previous quarter. This growth was mainly driven by output expansions in the biomedical manufacturing, transport engineering and electronics clusters.

On a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector shrank by 2.7 per cent, compared with a 0.7 per cent growth in the third quarter.

The construction sector contracted by 1 per cent year on year, slowing down from the 2.3 per cent decline in the previous quarter.

For 2019, MTI maintained its growth forecast at “1.5 to 3.5 per cent”, with growth expected to come in slightly below the mid-point of the forecast range.

In a separate report, non-oil domestic exports (NODX) grew 4.2 per cent in 2018, down from the 8.8 per cent increase in 2017, according to a statement Enterprise Singapore. Total merchandise trade rose by 9.2 per cent to S$1.1 trillion in 2018.

Enterprise Singapore maintains the growth projection for this year at between zero and 2 per cent for both total merchandise trade and NODX.

Outlook

MTI said the uncertainties and downside risks in the global economy have increased since three months ago.

There remains the risk of further escalation of trade conflicts between the US and its key trading partners, a sharper-than-expected slowdown of the Chinese economy and the possibility the UK will leave the EU without a withdrawal agreement.

“Against this external backdrop, the pace of growth in the Singapore economy is expected to slow in 2019 as compared to 2018,” MTI said.

The manufacturing sector is likely to see “a significant moderation in growth” following two years of expansion, the ministry said.

The electronics and precision engineering clusters are expected to face weakening global demand for semiconductors and semiconductor equipment with the fading of the global electronics cycle.

Growth in outward-oriented services sectors such as wholesale trade, transportation and storage, as well as finance and insurance is also expected to ease as growth in key advanced and regional economies moderates.

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