Singapore’s economic growth slowed to 1.9 percent on-year in the fourth quarter, from 2.4 percent in the third quarter, as the construction and wholesale & trade sectors contracted, the Ministry of Trade and Industry said on Friday.
For 2019, MTI kept its gross domestic product (GDP) growth forecast at 1.5 percent to 3.5 percent, and guided for “slightly below the mid-point of the forecast range.” For the full year, the city-state’s economy expanded 3.2 percent, it said.
“The manufacturing sector is likely to see a significant moderation in growth following two years of robust expansions,” the Ministry said.
“In particular, the electronics and precision engineering clusters are expected to face external headwinds due to weakening global demand for semiconductors and semiconductor equipment with the fading of the global electronics cycle,” it added.
It also forecast that outward-oriented services, such as wholesale trade, transportation and storage, and finance and insurance, would see an easing of activity on pace with growth moderation in regional and developed economies.
But it still projected the information and communications sector and the education, health and social services sectors would be resilient, supported by robust IT and digital services demand and the ramp-up of operations at healthcare facilities.
And it tipped a turnaround in the construction sector after three years of contraction as the contracts awarded since 2017 have seen a pickup and should spur more activity in the quarters ahead.
Construction contracts in fourth quarter
The Singapore dollar barely reacted to the data; the U.S. dollar was fetching around S$1.3581 shortly before the release, dropping as low as S$1.3569 shortly afterward, according to DZHI data. At 8:39 A.M. SGT, the dollar/Singapore dollar was at 1.3583.
In the fourth quarter, the construction sector contracted by 1.0 percent on-year, a slow pace of decline than the third quarter’s 2.3 percent contraction, the Ministry said.
“Output of the sector was weighed down by the weakness in public sector construction works,” it said.
In addition, the wholesale & retail trade sector contracted by 0.6 percent on-year in the quarter, swinging from growth of 1.8 percent in the third quarter, the statement said.
Wholesale trade was hit by declines in the machinery, equipment and supply and “others” sub-segments, while retail trade declined largely on weak motor vehicle sales, the Ministry said.
Offsetting the declines, the accommodation and food services sector expanded by 2.9 percent on-year in the quarter, down from 4.0 percent growth in the third quarter, it said.
“Growth was primarily supported by the accommodation segment, which expanded on the back of higher gross lettings at gazetted hotels in tandem with a 2.5 percent increase in international visitor arrivals,” it said, adding food services also grew on increased sales volumes in restaurants, fast-food outlets and at food caterers.
The manufacturing sector expanded 5.1 percent on-year in the fourth quarter, faster than the third quarter’s 3.5 percent growth, driven mainly by the biomedical manufacturing, transport engineering and electronics clusters, MTI said.
The information and communications sector also grew, expanding 6.1 percent on-year in the quarter, faster than the 5.4 percent growth in the third quarter, mainly on robust demand for IT services, the data showed.
The finance and insurance sector grew 4.1 percent on-year in the quarter, slightly picking up the pace from the third quarter’s 3.9 percent expansion, largely on sustained growth in the insurance and the “others” segment, which includes payment players, such as digital payments, and money-changing services, the data showed.