Opening Remarks by Mr Loh Khum Yean, Permanent Secretary for
Trade & Industry
1 Good morning and welcome to MTI.
2 Details of Singapore’s economic performance in the second quarter as
well as the growth outlook for 2017 are contained in the press release. Let me
highlight the key points.
3 The Singapore economy grew by 2.9 per cent on a year-on-year basis
in the second quarter, faster than the 2.5 per cent growth in the previous
quarter. Growth was primarily supported by the manufacturing, wholesale &
retail trade and finance & insurance sectors. On a quarter-on-quarter
seasonally-adjusted annualised basis, the economy expanded by 2.2 per cent,
a reversal from the contraction of 2.1 per cent in the preceding quarter.
4 Taking into account the economy’s performance in the first quarter,
GDP growth in the first half of 2017 was 2.7 per cent on a year-on-year basis.
5 Since the last Economic Survey of Singapore media briefing in May,
the global economic outlook has remained stable, with the global economy on
track to grow at a faster pace in 2017 as compared to 2016.
- In the US, the economy rebounded to grow at a faster pace in the
second quarter as compared to the first quarter. The growth
momentum is expected to be sustained in the second half of the year, supported primarily by domestic demand. In particular,
resilient labour market conditions will continue to boost private
consumption. Private investment is also expected to pick up on
the back of a recovery in mining and equipment investments. For
2017 as a whole, the US economy is expected to grow at a faster
pace as compared to 2016.
- The Eurozone economy, which expanded at a modest pace in
the first half of 2017, is expected to continue to see modest
growth for the rest of the year. First, labour market conditions
have improved, with unemployment rates on a downward trend
even though they remain elevated. Second, improving business
and consumer sentiments, coupled with accommodative
monetary policies, are expected to provide support to domestic
demand. On balance, growth in the Eurozone is expected to pick
up slightly in 2017 as compared to 2016.
- In Asia, China’s growth is expected to ease slightly in the second
half of 2017, following stronger-than-expected growth in the first
half of the year. In particular, real investments are likely to see a
modest slowdown over the course of the year. However, exports
are expected to remain robust, with the recent pickup in external
demand likely to be sustained into the second half of the year,
thereby supporting GDP growth. In ASEAN, growth in the
Indonesian and Malaysian economies is expected to remain
resilient, supported by healthy domestic demand and a sustained
improvement in merchandise exports.
6 While MTI expects the global economic recovery to continue on a firm
footing for the rest of the year, downside risks remain.
- First, anti-globalisation sentiments could adversely affect
global trade if they lead to increased protectionism, with knockon
effects on economic growth worldwide. Global political risks
and policy uncertainty also remain elevated, reflecting in part
uncertainties over the policies of the US administration and ongoing
Brexit negotiations.
- Second, at this advanced stage of the US’ economic expansion,
monetary policy could normalise faster than expected, thus
causing global financial conditions to tighten more than
anticipated. There also remains the risk of a steeper-thanintended
pullback of credit in China as efforts to contain leverage
and risks in the financial system continue.
7 Nonetheless, MTI’s assessment is that the potential for these downside
risks to have a significant impact on global growth in 2017 has eased
compared to three months ago.
8 Against this external backdrop, the manufacturing sector is likely to
continue to provide support to the Singapore economy in the second half of
the year. In particular, the strong performance of the electronics and precision
engineering clusters is expected to be sustained for the rest of the year on the
back of robust global demand for semiconductors and semiconductor-related
equipment, although the pace of expansion may moderate given less
favourable base effects. Likewise, externally-oriented services sectors such as the transportation & storage, wholesale trade and finance & insurance sectors
are expected to benefit from the pickup in global trade.
9 Meanwhile, the information & communications and education, health
and social services sectors are likely to remain resilient. However, the
performance of the construction sector is expected to remain lacklustre,
weighed down by the continued weakness in private and public sector
construction activities.
10 Taking into account these factors, as well as our GDP performance in
the first half of the year, the 2017 growth forecast for the Singapore economy
is narrowed upwards to “2.0 to 3.0 per cent”, from “1.0 to 3.0 per cent”.
Barring unexpected outcomes in the global economy and key sectors in the
domestic economy for the rest of the year, MTI’s central view is for full-year
GDP growth to come in at around 2.5 per cent.
11 Together with my panel members, I am happy to take your questions
now.