2. Speeches
Opening remarks by PS Mr Loh Khum Yean for Economic Survey of Singapore Second Quarter 2017
11 August 2017
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ECONOMIC SURVEY OF SINGAPORE 2017 (11 August 2017)
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.