Singapore’s economy beat analysts’ expectations and grew by 2.1 per cent in 2015 in line with the official growth forecast, the government said today.
The government had forecast full-year Gross Domestic Product (GDP) growth of “close to 2 per cent”, while private sector economists had expected growth to come in at 1.9 per cent, according to the latest quarterly poll by the Monetary Authority of Singapore last month.
In the fourth quarter of 2015, the economy expanded by 2 per cent on a year-on-year basis, slightly faster than the 1.8 per cent growth in the previous quarter, the Ministry of Trade and Industry (MTI) said in a statement.
On a quarter-on-quarter seasonally-adjusted annualised basis, GDP grew by 5.7 per cent in the fourth quarter, up sharply from the 1.7 per cent growth in the preceding quarter.
DBS bank’s senior economist Irvin Seah noted that despite beating expectations, overall GDP growth was at its slowest in six years.
Risks also remain with the potential capital flight that could result from further US interest rate hikes and fears of further deceleration in the Chinese economy, he said.
“Growth outlook in the next six to nine months will remain tepid before an improvement in the later part of 2016 can be expected. This should bring overall GDP growth for 2016 to 2.1 per cent,” Seah was quoted by the Channel News Asia as saying.
The 2015 economic growth was supported by the services sector and a pickup in public sector construction activities while manufacturing contracted due to external competition, weak demand and rising business costs.
The manufacturing sector remains “the weakest link” for Singapore’s economy, Seah told the channel.
“Both cyclical and structural challenges are dampening the growth prospects of this sector. External competition, rising business costs and weak external demand were key challenges facing the manufacturing sector for the past years,” he said.
The construction sector expanded by 2.2 per cent, up from the 1.1 per cent growth recorded in the previous quarter, with growth supported by a pick-up in public sector construction activities, the ministry said.
On a quarter-on-quarter basis, the sector expanded by 7 per cent, a reversal from the 4.9 per cent contraction in the preceding quarter.
The services producing industries posted year-on-year growth of 3.2 per cent in the fourth quarter, easing slightly from the 3.4 per cent growth in the previous quarter.
On a quarter-on-quarter basis, the services producing industries expanded 6.5 per cent, an improvement from the 2.9 per cent expansion in the previous quarter.
Seah said the services sector accounted for about two-thirds of Singapore’s economy.
“While this sector is known to be a resilient and stable engine of growth for Singapore, performance of the sector going forward will continue to be affected by the existing domestic manpower crunch and drag from the manufacturing sector,” he said.