SINGAPORE – Singapore’s economy posted surprisingly strong growth in the fourth quarter, although the outlook is clouded by China’s slowdown and risks of rising global trade protectionism under the incoming Trump Administration in the United States.
A rebound in manufacturing helped the city-state dodge a recession, a welcome lift for an economy that has seen lacklustre growth in the past two years as exports fell away amid sluggish global demand. The services sector also turned around after three quarters of contraction.
“The key will be to see what happens in the first few months of this year,” said Selena Ling, head of research and strategy for OCBC Bank.
Gross domestic product (GDP) expanded a seasonally adjusted and annualised 9.1% in the October-December period from the previous three months, its fastest pace in three years, initial estimates from the Ministry of Trade and Industry (MTI) showed yesterday. That came after GDP contracted a revised 1.9% in the third quarter. The median forecast in a Reuters poll was for growth of 3.7%.
The manufacturing sector grew an annualised 14.6% from the previous quarter compared with an 8.1% contraction in the third. From a year earlier, the sector expanded 6.5% – the strongest since the first quarter of 2014, when it grew 9.6% .
MTI said manufacturing growth was boosted by electronics and biomedical output. Service sector output jumped 9.4%, the first quarterly growth since the fourth quarter of 2015.
The Singapore dollar edged up although the tepid growth outlook for 2017 limited gains. It was up 0.3% at 1.4469 per U.S. dollar, having set a seven-year low of 1.4538 in late December.
The market moves reflected caution over the upbeat figures.
The economy grew 1.8% for the full year, exceeding the government’s previous forecast of 1.0-1.5% growth, but still the slowest growth since 2009.