Singapore's economy grew 0.7% in 2019, down from 3.1% in 2018: Flash data

Pedestrians in the Central Business District, on Nov 4, 2019. Singapore's economic growth for the full year is projected to be between 0.5 per cent and 1 per cent.
Pedestrians in the Central Business District, on Nov 4, 2019. Singapore's economic growth for the full year is projected to be between 0.5 per cent and 1 per cent.ST PHOTO: ONG WEE JIN

SINGAPORE - Singapore's economy grew by 0.7 per cent year on year in 2019, based on flash estimates released by the Ministry of Trade and Industry (MTI) on Thursday (Jan 2).

This was better than the 0.6 per cent growth forecast by analysts polled by Bloomberg, although it was far below the 3.1 per cent expansion in 2018.

It is also Singapore’s slowest economic growth since 2009, when the economy expanded 0.1 per cent year on year.

The ministry had projected economic growth for 2019 to be between 0.5 per cent and 1 per cent.

In the fourth quarter, the economy expanded by 0.8 per cent year on year, compared with the revised 0.7 per cent in the previous quarter. This is similar to what private-sector economists had predicted.

On a quarter-on-quarter seasonally adjusted annualised basis, the economy expanded at a slower pace of 0.1 per cent compared with the 2.4 per cent growth in the third quarter.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said that the figures confirm that the Singapore economy bottomed in the second quarter of 2019.

While noting that growth in 2019 was the weakest in a decade, she said there are positives to take away from a “glass half-full perspective”.

“We avoided a technical recession, which was one of the fears after the (soft second quarter figures), and we avoided a full-year recession, so the worst-case scenarios did not come true,” Ms Ling added.

Maybank Kim Eng senior economist Chua Hak Bin highlighted that the estimates for the manufacturing sector suggest that the Government expects December’s factory output to remain in contraction territory.

The manufacturing sector contracted by 2.1 per cent in the fourth quarter, continuing the 0.9 per cent decline in the third quarter.

 
 
 

This was due to output declines in the electronics, chemicals and transport engineering clusters, which more than offset expansions in the precision engineering, biomedical manufacturing and general manufacturing clusters, the MTI said.

But Dr Chua said that the sector could see some recovery and possibly bounce back into expansion territory in December, which could lead to a slight uptick in overall economic growth.

“Manufacturing should emerge from its recession in 2020, which will be a big plus to the overall economy,” he added.

The construction sector grew by 2.1 per cent year on year in the fourth quarter, slightly slower than the 2.4 per cent in the previous quarter, on the back of public sector construction activities.

The services-producing industries expanded 1.4 per cent, compared with 0.9 per cent in the third quarter, supported by the likes of the finance and insurance sector, as well as the business services sector.

Ms Ling said the services and construction sectors are likely to be the bright spots for 2020.

“The resilient domestic labour market, which contributes to consumer confidence and private consumption, coupled with public sector spending on infrastructure projects including education, health and social services, remain key supporting pillars for the Singapore economy,” she said.

 
 

“The 2020 growth prognosis remains attendant on the external risks and global economic environment, but the stars are aligning towards a more supportive recovery story,” Ms Ling said, noting that phase one of the United States-China deal will be signed later in January and recent policy measures announced by China to address its economic slowdown and other challenges.

“The US-China phase one trade deal has already provided some uplift to market sentiments,” she added, but cautioned that the overall impact of the trade negotiations will still be dependent on the later phases, and the trade agreement is likely to be a “protracted process” given how talks have progressed since 2018.

The MTI will release the final growth figures for the fourth quarter and the whole of 2019 - including performance by sectors, sources of growth, inflation, employment and productivity - in February.