Singapore dodges recession but economy may stay in 'slow mo': Quick analyst takes

Singapore dodged a technical recession comfortably in the fourth quarter of 2016.
Singapore dodged a technical recession comfortably in the fourth quarter of 2016.PHOTO: ST FILE

SINGAPORE - Singapore's economic growth quickened to the fastest pace in more than three years last quarter as manufacturing and services rebounded.

Gross domestic product rose 1.8 per cent in the fourth quarter from a year earlier compared with the 0.3 per cent expected by analysts polled by Bloomberg, according to flash data released on Tuesday (Jan 3).

For full-year 2016, the economy expanded 1.8 per cent - well above the Government's forecast of 1.0 to 1.5 per cent.

Here are some analyst reactions:

OCBC Bank's head of treasury research & strategy Selena Ling: Tide gradually turning but outlook remains tentative:

"The key outperformer was manufacturing which rose 6.5 per cent year on year (yoy) in the fourth quarter, which marked the strongest yoy quarter since the first quarter of 2014.

The services sector also saw its growth momentum pick up to +0.6 per cent yoy, which is an improvement from the three straight quarters of sequential slowdown previously.

The tide is gradually turning for 2017, with the long-awaited domestic manufacturing recovery finally taking root at +2.3 per cent yoy for 2016 vis-à-vis -5.2 per cent yoy in 2015.

However, the 2017 outlook remains tentative, with GDP growth likely still rangebound at around 1-2 per cent (official forecast is 1-3 per cent), amid key uncertainties like the Trump presidency potentially having spillover effects for global trade, China's slowdown, and heightened market volatility, especially on the currency and interest rate front, potentially weighing on corporate and consumer confidence."

ANZ economist Ng Weiwen: Economy to stay in "slow mo":

"Singapore dodged a technical recession comfortably in the fourth quarter of 2016 but the Singapore economy is likely to remain in "slow mo".

Specifically, we do not expect the Singapore growth outlook to improve materially in 2017. We expect GDP growth to ease from 1.8 per cent in 2016 to 1.4 per cent for the whole of 2017 which is at the lower half of the Government's 1-3 per cent forecast range.

At present, prospects of a more protectionist trade policy would be negative for Singapore who is wedded to the old export model and this will have knock on impact on domestic incomes. Consequently, domestic demand weakness should continue to weigh on an already subdued labor market

Still, we expect fiscal impulse to remain positive with the upcoming FY17 budget expected to lend targeted support to households and corporates."