'Sluggish growth, but some sectors show resilience'

Singapore's economy is facing an uneven growth outlook owing to global uncertainty, but certain industries are showing signs of resilience, said Monetary Authority of Singapore (MAS) managing director Ravi Menon.

"Singapore's economic growth remains sluggish. Growth in the first half of 2016 has averaged 2.2 per cent in year-on-year terms," he told a briefing yesterday.

"The economy's performance in the second half of 2016 will not be too different from the first half. But there will be some month-to- month volatility."

The central bank is wary of external risks on several fronts. Britain's vote to leave the European Union will hit the British economy and may have a "small dampening effect" on global growth, Mr Menon cautioned.

And a string of elections across Europe next year may throw up further disruption for global markets.

A lack of business investment and demand in the United States despite the moderate recovery there does not bode well for Asia and Singapore, while China's economic reforms have also affected regional exports.

Still, Singapore's electronics industry managed to record quarter-on-quarter growth in April and May, and domestic services - such as healthcare and eduction - will continue to see modest expansion. But financial services will cool from its previous surge.

Against this backdrop, "the forecast for growth in 2016 is 1 to 3 per cent. The Ministry of Trade and Industry and MAS are reviewing this range", Mr Menon said.

DBS senior economist Irvin Seah said the mid-year review is a routine exercise by MAS and does not imply a change to existing views, but that the outlook offers little to cheer for.

"The question is whether the review will lead to upward or downward narrowing of the range. I expect MAS to narrow the growth forecast to 1 to 2 per cent, and our own forecast is 1.5 per cent this year, in which case, it will be the lowest in seven years.

"One of the key reasons is that China's structural slowdown is here to stay, and bear in mind that Singapore is also going through restructuring. That's why we have been lowering our growth expectations year after year - the trajectory is quite flat and I don't see any driver out there."

The Ministry of Trade and Industry will release the advance gross domestic product estimates for the second quarter next month.

A version of this article appeared in the print edition of The Straits Times on July 26, 2016, with the headline ''Sluggish growth, but some sectors show resilience''. Print Edition | Subscribe