​ECONOMIC SURVEY OF SINGAPORE FIRST QUARTER 2018
(24 May 2018) 

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 for the first quarter and the growth outlook for 2018 are contained in the press release. Let me highlight the key points.

3                    The Singapore economy expanded robustly in the first quarter of 2018.

• On a year-on-year basis, GDP grew by 4.4 per cent in the first quarter, higher than the 3.6 per cent growth in the fourth quarter of 2017. Growth was primarily supported by the manufacturing, finance & insurance and wholesale trade sectors.

• On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 1.7 per cent, moderating from the 2.1 per cent growth in the preceding quarter.

​4                    At the last Economic Survey of Singapore media briefing in February, MTI highlighted that the global growth outlook for 2018 had improved slightly. Since then, the growth outlook of some of Singapore’s key final demand markets has improved further, with the IMF upgrading its 2018 forecasts for the US and Eurozone.

• The US economy is projected to grow at a faster pace this year, partly due to a larger expected boost to private investment as a result of the recent tax reforms. Stable labour market conditions, along with rising wages, will also continue to support private consumption in the US.
• The growth outlook for the Eurozone economy for 2018 has also improved slightly since the start of the year, with full-year growth now expected to be similar to that achieved in 2017. In particular, domestic demand is projected to remain resilient on the back of improving labour market conditions, as well as healthy business and consumer sentiments. At the same time, monetary policies in the region are likely to remain largely accommodative, thereby supporting growth.  
• In Asia, China’s GDP growth is projected to slow in 2018 as compared to 2017 on the back of an expected moderation in exports growth. Investment growth is also likely to ease slightly with the scaling back of infrastructure investments. Within ASEAN, growth in the key economies is expected to remain firm in 2018, supported by sustained improvements in domestic demand as well as merchandise exports.

​5                    Alongside the improvement in the growth outlook of some of the key economies, some uncertainties and downside risks in the global economy have also increased since early 2018.

• First, recent protectionist actions and tariff measures by the US have increased the risk of global trade tensions. This could adversely affect international trade as well as dampen investor and consumer confidence, in turn weighing on global growth.
• Second, against the backdrop of rising global interest rates and generally tightening financial conditions, financial vulnerabilities in emerging market economies could surface, particularly for those with elevated debt levels, including in the region. If this occurs, there could be some pullback in investment and consumption growth in these economies.

6                    On balance, MTI expects the pace of growth in the Singapore economy to remain firm in 2018, with growth supported primarily by outward-oriented sectors. In particular, the manufacturing sector is likely to continue to expand on the back of sustained growth in the electronics and precision engineering clusters, albeit at a more moderate pace as compared to 2017. Likewise, outward-oriented services sectors such as finance & insurance, transportation & storage and wholesale trade are projected to continue to benefit from healthy external demand.

7                    Growth is also expected to broaden further to domestically-oriented services sectors over the course of the year, on the back of an improvement in consumer sentiments amidst the on-going recovery in the labour market. However, the performance of the construction sector is likely to remain lacklustre as the earlier weakness in construction demand, particularly from the private sector, is expected to continue to weigh on construction activities this year.

8                    Taking into account the robust performance of the Singapore economy in the first quarter and the slightly improved external demand outlook for Singapore, MTI expects GDP growth for 2018 to come in at between “2.5 to 3.5 per cent”, barring the full materialisation of downside risks.

9                    Together with my panel members, I am happy to take your questions now. 

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