ASEAN KEY DESTINATIONS
Singapore economy grew 2% in 2015, weakest since 2009
SINGAPORE: The Republic’s economy expanded by 2 per cent in 2015, the weakest annual growth since 2009 when the economy was hit by the global financial crisis, according to figures released by the Ministry of Trade and Industry (MTI) on Wednesday (Feb 24).
The figure was a sharp drop from the 3.3 per cent growth the previous year, and was revised downwards from the 2.1 per cent growth initially projected.
Growth was mainly supported by the wholesale and retail trade, and finance and insurance sectors, according to MTI.
For the fourth quarter, the economy expanded by a slower-than-expected 1.8 per cent from a year ago, after industrial production in December suffered its biggest year-on-year slump in eight months. The initial estimate was for a growth of 2 per cent.
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 6.2 per cent in the fourth quarter, MTI said.
"There continues to be a domestic external divide for the GDP growth," said Mr Jeff Ng, an economist for South-east Asia at Standard Chartered Bank. "If you look at some of the more domestic oriented sectors such as construction, business services and other services, which include health and education, they continue to be growing modestly. But if you look at the other more externally oriented sectors, such as manufacturing, I think there's some degree of a drag for overall GDP growth.
"Wholesale and retail trade remains an anomaly in the sense that the external demand remains pretty weak, but it's supported by lower oil prices."
CHINA RESTRUCTURING COULD HAVE NEGATIVE EFFECTS
The MTI has maintained its forecast of growth between 1 per cent and 3 per cent this year.
The ministry said financial market volatility amid China's ongoing restructuring could have negative effects on the real economy if it carries on. It added that low commodity prices and interest rate adjustments could lead to capital outflows from regional economies.
"Even though global growth is expected to improve, the continued slowdown in China, the services-driven nature of growth in the US, as well as the trends of in-sourcing in China and the US, may mean that external demand for our exporters may not see a significant boost this year," said MTI’s Permanent Secretary Ow Foong Pheng.
"Lower oil prices have weakened the prospects for new rig orders for firms in the marine and offshore segment, and heightened the risks of further deterrents and cancellations of existing orders," she added.
As for sectors that depend more on domestic demand, MTI said prospects for construction have weakened, with fewer contracts awarded last year. Labour constraints will continue to weigh on labour-intensive industries such as food services.
The economic data showed that labour productivity, as measured by value added per worker, grew by 0.5 per cent in the fourth quarter - the first improvement since the first quarter of 2014 - driven by the wholesale and retail trade, and construction sectors.
For 2015 as a whole, overall labour productivity fell by 0.1 per cent, marginally improving from the decline of 0.5 per cent in 2014.
MAS MAINTAINS POLICY STANCE
One economist said the weak economic outlook and low inflation may prompt the Monetary Authority of Singapore (MAS) to ease policy by slowing the Sing dollar's rise.
"I think that the MAS is under pressure to actually ease policy and within Singapore, they focus on the exchange rates. So, what we are looking forward to is for them to sort of flatten the slope," said Ms Sian Fenner, lead Asian economist for Oxford Economics.
"We don't see them actually re-centering the band that's been equivalent to a devaluation. We think they're going to continue to take a fairly cautious approach and flatten the slope of monetary appreciation."
Speaking at a media briefing on Wednesday, MAS said its policy stance remains "appropriate and unchanged" as announced in October 2015, and its next policy review will be "as scheduled in April 2016".
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