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Economy grows 0.7%, slowest in a decade

This article is more than 12 months old

But experts say brighter prospects this year due to manufacturing, service sectors

Singapore's economic growth was muted last year, with modest expansion recorded in the fourth quarter, but the growth picture looks to be brighter this year.

The manufacturing sector is likely to see slow recovery in the year ahead, and the service sector is likely to be a stable pillar of growth for Singapore, said economists.

The economy grew 0.7 per cent last year, the slowest in a decade and down from 2018's 3.1 per cent, according to flash estimates released by the Ministry of Trade and Industry (MTI) yesterday.

FORECAST

This was within the 0.5 per cent to 1 per cent forecast by MTI in November and slightly better than the 0.6 per cent uptick predicted by analysts polled by Bloomberg.

Singapore's economy expanded 0.8 per cent year on year in the fourth quarter, up slightly from the revised 0.7 per cent growth in the previous quarter.

OCBC Bank's head of treasury research and strategy Selena Ling said the flash estimates confirm that the Singapore economy bottomed in the second quarter of last year.

While last year's figures are the weakest since 2009, when Singapore's economy recorded 0.1 per cent year-on-year growth, she said there are positives to take from a "glass half-full perspective".

"We avoided a technical recession, which was one of the fears (after the soft second-quarter figures), and we avoided a full-year recession, so the worst-case scenarios did not come true," said Ms Ling.

Economists are more optimistic for this year, and MTI has forecast 0.5 per cent to 2.5 per cent growth.

DBS Bank senior economist Irvin Seah said: "Barring any unforeseen negative shocks, growth momentum is expected to pick up gradually in the coming quarters."

Manufacturing contracted 2.1 per cent year on year in the fourth quarter, steeper than the 0.9 per cent dip in the previous quarter.

This was due to output declines in the electronics, chemicals and transport engineering clusters, which more than offset expansions in the precision engineering, biomedical manufacturing and general manufacturing clusters, MTI said.

Maybank Kim Eng senior economist Chua Hak Bin said that factory output is likely to have hit its trough in the fourth quarter.

"Manufacturing should emerge from its recession in 2020, which will be a big plus to the overall economy," he said.

External headwinds will remain strong this year, Mr Seah noted, and an improvement in the global economic outlook will hinge on further progress in the US-China trade talks.

BUSINESS & FINANCE