Key Beneficiary Of External Recovery

Economic Research	28 March 2017
Singapore
Economic Outlook
Key Beneficiary Of External Recovery Singapore’s GDP grew 2% in 2016, driven largely by a steep increase in 4Q exports. Domestic demand, however, slowed sharply on account of contractions in fixed asset investments and private consumption. Despite continuing structural challenges, we project for Singapore’s real GDP to grow 2.2% in 2017, from +2% last year, banking on:     i.   A continued upturn in global demand, which would support the manufacturing and logistics industries, the nation’s two key engines of growth;    ii.   Improving productivity gains, primarily in the manufacturing sector;   iii.   Stabilising domestic demand, aided by a low base effect and supportive Government measures. Private investment, however, is envisaged to remain subdued due to an oversupply in properties, as well as the plethora of risks that still plague the global economy. Manufacturing production set to broaden but moderate. Prolonged growth in semiconductor demand is beginning to spill over into supporting industries. Services activities are likely to stabilise but growth should remain two-tiered. No change in monetary policy expected, due to a brighter economic outlook and muted inflation expectations. However, the Government may consider easing property purchasing curbs if house prices continue to fall unabated. Economist:  Ng Kee Chou | +603 92802179