Singaporean Q4 GDP growth downwardly revised, inflation likely to remain subdued in H1 2018

Singapore’s fourth quarter growth data was downwardly revised from the advance estimate. On a quarterly basis, the GDP grew 2.1 percent, as compared with the advance estimate of 2.8 percent. The downward revision in economic growth was mainly because of the contraction in the manufacturing sector, which accounts for 18 percent of total production.

The rebound in construction and the services sector remained on course. Although the annual rate in construction continues to be in contractionary zone, the sequential change shows that the sector has bottomed out, noted ANZ in a research report. Even so, the government continues to flag weak performance for the sector in 2018. In the meantime, services continued with its modest rise of 3.5 percent, in spite of a marginal slowdown in quarterly growth to 6.3 percent from 6.5 percent.

Meanwhile, investment grew in the quarter by 2.2 percent year-on-year. In the meantime, exports growth slowed to 4.2 percent in the fourth quarter from 4.4 percent in the prior quarter. The sequential moderation is indicating towards risks of a weakening in external trade. Private consumption grew a solid 5.55 percent year-on-year.

In spite of the quarterly deceleration, Singaporean economic activity continues to lack in breadth to engender inflation pressures. Indeed, inflation is expected to stay subdued in the first half of this year, stated ANZ.

“This should allow the MAS to maintain its neutral stance until domestic demand sufficiently recovers. As a consequence, we still expect the MAS to exit from their neutral stance at their October 2018 review”, added ANZ.

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