SINGAPORE - The Singapore economy outperformed expectations, expanding 1.8 per cent in the fourth quarter of 2016 from a year earlier, putting growth for the whole of 2016 at 1.8 per cent, according to advance estimates from the Ministry of Trade and Industry (MTI) on Tuesday (Jan 3).
Growth last year was well above MTI's earlier announced forecast of 1.0 to 1.5 per cent.
Economists polled by Bloomberg had expected gross domestic product (GDP) to expand just 0.3 per cent in the fourth quarter from a year earlier, after growing a revised 1.2 per cent in the third quarter.
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 9.1 per cent in the October-December period, a reversal from the 1.9 per cent contraction in the previous quarter.
Prime Minister Lee Hsien Loong, who tipped 2016's one-plus per cent growth in GDP in his New Year message on Saturday, had said growth is "still positive, though less than we hoped for."
He also said the Government is keeping a close watch on the labour market as it has shown signs of weakening. Layoffs in Singapore in the first half of 2016 reached 9,510, the highest since 2009, with the unemployment rate hitting 2.1 per cent in the third quarter.
"While the labour market has eased, unemployment remains low and we are still creating new jobs. I know many employers and workers are concerned, but rest assured the government is watching this closely," Mr Lee had said.
The government's Committee on the Future Economy will unveil its recommendations on longer term strategies for growth "in a few weeks' time", he added.
The committee is charged with finding strategies to keep Singapore's economy competitive and to identify areas of growth.
Private economists surveyed by Singapore's central bank, who slashed their forecasts for 2016 GDP growth to 1.4 per cent, are expecting the economy to grow 1.5 per cent this year.
MTI's advance GDP estimates are computed largely from data in the first two months of the quarter and are subject to revision when more comprehensive data becomes available.
They showed that the manufacturing sector expanded by 6.5 per cent on a year on year basis in the fourth quarter, an improvement from the 1.7 per cent growth in the third quarter. Growth was primarily driven by the electronics and biomedical manufacturing clusters, even as the transport engineering and general manufacturing clusters continued to contract. On a quarter on quarter seasonally-adjusted annualised basis, the sector grew by 14.6 per cent, a sharp turnaround from the 8.1 per cent contraction in the third quarter.
The construction sector contracted by 2.8 per cent on a year-on-year basis in the fourth quarter, extending the 0.2 per cent decline in the previous quarter. The contraction was largely due to the decline in private sector construction activities. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector shrank by 4.7 per cent, moderating from the 14.8 per cent contraction in the preceding quarter.
Growth in the services producing industries came in at 0.6 per cent, slightly faster than the 0.3 per cent growth in the previous quarter. Growth was supported by the "other services industries", transportation & storage and business services sectors. On a quarter on quarter basis, the services producing industries rebounded with 9.4 per cent growth, a reversal from the 0.4 per cent contraction in the third quarter.