Singapore GDP grows faster than expected

PUBLISHED : Thursday, 20 February, 2014, 3:42pm
UPDATED : Thursday, 20 February, 2014, 3:42pm

Singapore’s economy grew faster than expected in last year’s fourth quarter, helped by a surge in manufacturing output, government data showed on Thursday.

The city state’s economy expanded an annualised and seasonally adjusted 6.1 per cent from the previous quarter, data from the Ministry of Trade and Industry showed.

That compared with a 0.8 per cent growth forecast in a Reuters poll and the government’s earlier estimate of a 2.7 per cent contraction.

Singapore said the economy grew 5.5 per cent in the fourth quarter from a year earlier, compared to market expectations of 5.3 percent year-on-year growth in a Reuters survey and the government’s earlier estimate of 4.4 per cent. Full-year growth for 2013 reached 4.1 per cent, surpassing the government’s advance estimate of 3.7 per cent growth.

The government maintained its forecast for full-year growth this year of 2-4 per cent.

“Overall I’m still very optimistic about Singapore’s 2014 GDP,” UOB economist Francis Tan said.

“This manufacturing growth is not a one- or two-month wonder. It will continue for quite a while; it will be quite sustained throughout the year”.

This manufacturing growth is not a one- or two-month wonder. It will continue for quite a while
Francis Tan, UOB

The manufacturing sector grew at an annualised 10.4 per cent in the fourth quarter from the third, while year-on-year manufacturing growth accelerated to 7 per cent from a 5.3 per cent expansion in the previous period.

Improvements in electronics and continued strong growth in the transport engineering area helped the manufacturing sector’s growth, the ministry said.

An expected pick-up in the US economy and improving European growth are seen as likely to underpin exports and Singapore’s economy this year, economists said.

Still, the trade-dependent country is likely to face a bumpy road ahead on concerns over a slowdown in China’s economic growth and as the US Federal Reserve is expected to continue to scale back its monetary stimulus, known as quantitative easing.

“The only downside is in the financial sector. The fear of QE tapering is still dominating the market. It will have some impact on trading volume and performance in the financial services sector,” said Irvin Seah, a DBS economist in Singapore.

Singapore’s central bank is expected to maintain its monetary policy stance at its April meeting, economists said.

At its latest policy meeting in October, the Monetary Authority of Singapore stuck to its position of allowing a “modest and gradual” appreciation of the Singapore dollar and warned that core inflation was likely to accelerate this year.