Why It Matters

More balanced growth ahead

After a strong showing last year, Singapore's exports have taken off on a similarly high note in 2018, with double-digit growth in January.

But economists are taking a cautiously optimistic stance. They expect export growth to slow, partly due to the high base set by 2017.

Non-oil domestic exports (Nodx) grew 13 per cent last month, following full-year growth of 8.8 per cent in 2017.

International Enterprise Singapore has more modest expectations for the coming year, predicting Nodx growth of 1 per cent to 3 per cent.

Economists are similarly restrained, with United Overseas Bank economist Francis Tan predicting 6.5 per cent growth.

He points to slowing factory activity in China and the current cyclical slowdown in Asia-Pacific semiconductor sales as reasons to believe that the strong figure for 2017 is not sustainable over the coming months.

This caution is tied to expectations of slowing manufacturing growth.

DBS economist Irvin Seah says: "Growth in the manufacturing sector will moderate as global economic conditions normalise."

The upshot is that this year may see Singapore's manufacturing sector easing off its leading role in growth, with domestic oriented services playing a larger role instead.

Mr Seah takes this as an encouraging sign of more balanced growth.

In 2017, manufacturing was in the driver's seat, growing at 10.1 per cent. But things could change this year, he says.

"The strength in the services sector is likely to persist from a positive spillover from global recovery into the domestic sector."

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye similarly expect services to play a bigger role this year. They say: "2018 will likely see growth firming in domestic oriented services, partly offsetting the slower growth in manufacturing and trade related services."

A version of this article appeared in the print edition of The Straits Times on February 16, 2018, with the headline 'More balanced growth ahead'. Print Edition | Subscribe