SINGAPORE - The Singapore economy has picked up in recent months but growth has been volatile and uneven, the country's central bank said in its half-yearly review.
As such, the official forecast for economic growth this year will be kept at 1 to 3 per cent, not much changed from last year's 2 per cent expansion, said the Monetary Authority of Singapore (MAS) in its Macroeconomic Review released on Thursday (April 27).
Trade-related sectors have picked up on the back of an improving global economy, but growth in domestic-oriented sectors such as retail and construction remains subdued, said the MAS.
Its review contains the central bank's take on Singapore's economic performance and outlook. The last review was released in October 2016.
Trade-related sectors have since experienced a significant turnaround which started in the fourth quarter of 2016, underpinned by a rebound in manufacturing, the MAS noted.
This was driven by a resurgence in global chip demand which boosted semiconductor production, as well as the completion of maintenance work in the biomedical cluster.
Firmer manufacturing activity, in turn, has had positive spillovers on trade-related services such as air and sea cargo handling.
In the services sector, growth in financial services has picked up on the back of rallying global financial markets.
However, growth in domestic-oriented sectors has been largely subdued. This was partly a reflection of sluggish private sector construction activity, as well as lacklustre retail sales.
Growth this year will be anchored by trade-related sectors, particularly the IT-associated segments, the MAS said. These sectors should benefit from the faster pace of global economic activity.
New mobile phone product launches, together with increasing semiconductor intensity in electronics products, will provide support for the domestic electronics industry.
However, while firm external demand will continue to benefit the semiconductor and precision engineering industries, recovery in the rest of the manufacturing sector is likely to remain patchy.
In addition, domestic-oriented segments will continue to experience lacklustre growth. Retail and food services, in particular, will face both cyclical and structural challenges amid a soft labour market and subdued consumer confidence, as well as greater competitive pressures, the MAS report said.