Growth in Singapore is expected to be below 2% in 2016 but is likely to accelerate in 2017 according to Singapore Ministry of Trade and Industry. However, tourism should show resilience and be among Singapore fastest growing economic sectors.
The Ministry of Trade and Industry (MTI) announced on Thursday that it expects the Singapore economy to grow by “1.0 to 1.5 per cent” in 2016, and by “1.0 to 3.0 per cent” in 2017. Economic Performance in 3 quarter 2016 was sluggish as Singapore economy grew only by 1.1 per cent on a year-on-year basis in the third quarter, slower than the 2.0 per cent growth in the previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted by 2.0 per cent, a reversal from the 0.1 per cent growth in the second quarter.
The finance & insurance sector contracted by 0.7 per cent year-on-year, a pullback from the 0.7 per cent growth in the second quarter. This was due to weakness in the offshore financial intermediation, fund management and security dealing segments. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector shrank by 4.7 per cent, extending the 11.7 per cent contraction in the preceding quarter.
The business services sector expanded by 0.2 per cent year-on-year, slower than the 0.7 per cent growth in the second quarter. Growth was supported by the professional services segment while the real estate segment continued to contract. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector recorded a slight contraction of 0.1 per cent, easing from the decline of 0.7 per cent in the previous quarter.
The tourism sector managed well. The accommodation & food services sector grew by 2.1 per cent year-on-year, faster than the 1.9 per cent growth recorded in the preceding quarter. Growth was supported by the accommodation segment, which expanded in tandem with an increase in visitor arrivals. On a quarter-on-quarter basis, the sector grew at a seasonally-adjusted annualised rate of 9.1 per cent, a turnaround from the 2.7 per cent decline in the second quarter.
Full-year growth for 2016 is likely to come in marginally weaker than in 2015 with the government lowering its GDP growth forecast for 2016 to “1.0 to 1.5 per cent”, from “1.0 to 2.0 per cent”. In 2017, while economy is expected to pick up-particularly in Asia-, the growth outlook for the Singapore economy would remain modest around “1.0 to 3.0 per cent” in 2017. However, Tourism-related sectors are likely to benefit from a boost in travel demand as the global economic outlook improves. At the same time, sectors such as information & communications and “other services industries” are likely to continue to support growth. On the other hand, externally-oriented services sectors such as finance & insurance and wholesale trade are expected to remain sluggish.