Strength Amidst Modest Growth

According to Ministry of Trade and Industry (MTI) Singapore, the Singapore economy grew by 2.1 per cent on a year-on-year basis in the fourth quarter of 2014, compared to the 2.8 per cent growth in the previous quarter. For the whole of 2014, the Singapore economy expanded by 2.9 per cent, slower than the 4.4 per cent in 2013.

The manufacturing sector contracted by 1.3 per cent year-on-year, a reversal from the 1.7 per cent growth in the previous quarter. The contraction was primarily due to the transport engineering and electronics clusters.

The construction sector eased to 0.7 per cent year-on-year, from 1.1 per cent in the previous quarter, due to private sector construction activities.

The wholesale & retail trade sector expanded by 0.6 per cent year-on-year, moderating from the 2.1 per cent growth in the preceding quarter. The moderation in growth was due to slower growth in the wholesale trade segment.

The transportation & storage sector contracted by 0.4 per cent year-on-year, compared to the 0.1 per cent growth in the previous quarter, mainly due to the water transport, and storage & other support services segments.

Growth in the finance & insurance sector surged to 10.3 per cent year-on-year, from 9.9 per cent in the previous quarter, with growth that was supported mainly by the fund management activities and insurance segments.

The business services sector expanded at a faster pace of 2.9 per cent year-on-year, compared to 4.0 per cent in the previous quarter. Growth was mainly due to the rental & leasing, and other professional, scientific & technical activities segments.

On a year-on-year basis, the information & communications sector grew by 4.4 per cent, an increase from the 4.0 per cent growth in the previous quarter.

Growth in the accommodation & food services sector improved slightly to 1.3 per cent year-on-year from 1.0 per cent in the previous quarter. On the other hand, growth in the “other services industries” grew by 2.4 per cent, an improvement from the 1.6 per cent growth in the preceding quarter.

Total Trade

Based on the International Enterprise (IE) Singapore’s December 2014 trade performance review, Singapore’s total external trade increased by 2.3 per cent in December 2014, following a 0.8 per cent increase in the previous month, due to the rise in both electronic and non-electronic NODX. Oil trade declined by 5.5 per cent in the third quarter of 2014, after an increase of 8.2 per cent in the previous quarter. Non-oil trade declined by 2.7 per cent in the third quarter of 2014, following the previous quarter’s 0.9 per cent increase.

Oil Domestic Exports

On a year-on-year basis, oil domestic exports declined by 22.0 per cent in December 2014, after a contraction of 16.6 per cent in the previous month. The year-on-year decline of oil domestic exports was mainly due to lower sales to Malaysia (-34.2 per cent), Hong Kong (-38.9 per cent) and China (-39.9 per cent). In terms of volume, oil domestic exports rose by 5.9 per cent in the December 2014, following the 0.1 per cent increase in the previous month.

Non-Oil Domestic Exports

On a year-on-year basis, the non-oil domestic exports (NODX) increased by 2.3 per cent in December 2014, following the previous month’s 0.8 per cent growth, due to expansion in both electronic and non-electronic NODX.

Electronic domestic exports rose by 0.4 per cent in December 2014, following the previous month’s 10.2 per cent contraction. Non-electronic NODX rose by 3.2 per cent in the third quarter of the same year, following the 6.2 per cent increase in the previous month. The rise in non-electronic NODX was led by specialised machinery (+25.9 per cent), food preparations (+54.8 per cent) and non-electric engines & motors (+278.2 per cent).

Non-Oil Re-Exports

Non-oil re-exports (NORX) rose by 8.7 per cent in the December 2014, after the previous month’s rise of 3.5 per cent. The rise in NORX can be attributed to an increase in both electronic and non-electronic NORX. On a year-on-year basis, electronic NORX increased by 10.9 per cent in the December 2014, following a 5.7 per cent rise posted in the preceding quarter. This is due to ICs (+17.8 per cent), telecommunications equipment (+32.7 per cent) and diodes & transistors (+19.1 per cent). Non-electronic NORX increased by 6.3 per cent in December 2014, after the previous month’s growth of 1.2 per cent. The rise in non-electronic NORX was due to printed matter (+495.8 per cent), electrical machinery (+55.6 per cent) and personal beauty products (+40.6 per cent).

2015 Outlook

According to MTI, the Singapore economy is expected to grow by 2.0 to 4.0 per cent in 2015. Although MTI expects the global growth in 2015 to pick up modestly, the pace of recovery is likely to remain uneven across the economies. Supported by domestic demand, growth in the US is expected to improve in 2015. While the growth in the Eurozone is expected to pick up in 2015, the pace of recovery is likely to remain weak. Growth in Japan is expected to remain sluggish in 2015 due to its fiscal consolidation efforts, and China’s growth is expected to ease further in 2015 on the back of sluggish real estate activities, while key ASEAN economies like Malaysia and Indonesia are expected to remain resilient in 2015.

The MTI also reported that domestically, the labour market is expected to remain tight, with low unemployment and rising vacancy rates. Against this global and domestic backdrop, the growth outlook for Singapore remains modest. In tandem with the expected pick-up in external demand, externally-oriented sectors such as manufacturing, wholesale trade and finance & insurance are likely to provide support to growth. While some domestically-oriented sectors such as businesses services are expected to remain resilient, labour-intensive ones like construction, retail and food services may see their growth weighed down by labour constraints.

In January 2015, the Monetary Authority of Singapore (MAS) also its move to slow the appreciation of the Singapore dollar, which also points to good news for exporters by making their exports more competitive.

Sources: International Enterprise (IE) Singapore, Ministry of Trade and Industry (MTI) Singapore, and Monetary Authority of Singapore (MAS). For more information, please visit IE Singapore’s website at www.iesingapore.gov.sg or MTI’s website at www.mti.gov.sg.
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