Opening remarks by PS Mr Loh Khum Yean for Economic Survey of Singapore Third Quarter 2017

​ECONOMIC SURVEY OF SINGAPORE 2017 (23 November 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 third quarter of 2017, as well as the growth outlook for 2017 and 2018 are contained in the press release. Let me highlight the key points.

3                    The Singapore economy grew at a faster pace in the third quarter.

• On a year-on-year ​basis, GDP grew by 5.2 per cent in the third quarter, faster than the 2.9 per cent growth in the second quarter.  Growth was primarily supported by externally-oriented sectors such as the manufacturing, finance & insurance, wholesale trade and transportation & storage sectors.

• On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 8.8 per cent, accelerating from the 2.2 per cent growth in the second quarter.

4                    Since the last Economic Survey of Singapore media briefing in August, the growth outlook for Singapore’s key external demand markets such as the US, Eurozone, China and ASEAN-5 has improved. At the same time, the recovery in global electronics demand has been stronger than expected. In line with stronger external demand conditions, the Singapore economy performed better than expected in the third quarter, on the back of strong growth in the manufacturing and externally-oriented services sectors. Taking into account the robust performance of the Singapore economy in the third quarter, GDP growth in the first three quarters of the year came in at 3.5 per cent, better than the 1.7 per cent achieved over the same period last year.

5                    For the rest of the year, Singapore’s GDP growth is expected to moderate somewhat but remain firm. In particular, the externally-oriented sectors are projected to continue to expand, albeit at a more modest pace, and support growth for the rest of the year. Domestically-oriented sectors like the health, education & social services sector are also expected to remain resilient.

6                    Taking these factors into consideration, the GDP growth forecast for 2017 is upgraded to “3.0 to 3.5 per cent”, from “2.0 to 3.0 per cent”.

7                    Looking ahead to 2018, global growth is expected to pick up marginally on the back of stronger growth in the US and some emerging markets and developing economies. However, growth in several of Singapore’s key external demand markets such as China and the Eurozone is projected to ease.

• In the US, the economy is expected to pick up slightly in 2018, primarily supported by domestic demand. First, resilient labour market conditions are likely to support private consumption. Second, private investment is expected to remain on a modest expansionary path amidst an improvement in business confidence.

• The Eurozone’s growth is projected to ease in 2018 following the rebound in 2017. Growth will be supported by domestic demand. First, labour market conditions in the region are expected to continue to improve. Second, monetary policies are expected to remain largely accommodative, even though the European Central Bank (ECB) will be commencing the taper of its quantitative easing programme in January next year.

• In Asia, China’s growth is expected to moderate in 2018 on the back of a slowdown in investment, even as consumption is likely to remain stable and provide support to growth. Meanwhile, growth in the key ASEAN economies is expected to stay resilient, supported by domestic demand and merchandise exports.

8                    At the same time, there continues to be downside risks in the global economy.

• First, global policy uncertainty remains elevated, reflecting in part uncertainty over the US administration’s policies and lingering concerns over the rise in protectionist sentiments. At the same time, geopolitical tensions in North Korea remain, and could affect the economies of regional countries if tensions escalate.  

• Second, at this relatively advanced stage of the US’ economic recovery, an upside surprise in inflation cannot be ruled out. Should this happen, monetary policy in the US could normalise faster than expected, thereby causing global financial conditions to tighten more than anticipated.  

9                    Against this backdrop, the pace of growth in the Singapore economy is expected to moderate in 2018 as compared to 2017, but remain firm.  

• The manufacturing sector is likely to continue to expand and provide support to overall GDP growth. In particular, the electronics and precision engineering clusters are expected to see sustained expansions on the back of healthy demand conditions in the global semiconductor and semiconductor equipment markets, although the pace of expansion is likely to taper in 2018 given less favourable base effects.

• Externally-oriented services sectors such as wholesale trade, transportation & storage and finance & insurance are expected to benefit from the global economic recovery, although their growth momentum may ease in tandem with the moderation in growth in key advanced and regional economies.

• Sectors such as the information & communications and education, health & social services are likely to remain resilient, supported by domestic drivers of growth.

• On the other hand, the performance of the construction sector is expected to remain lacklustre, weighed down by the continued weakness in construction demand.

10               Taking into account the global and domestic economic environment, MTI expects the Singapore economy to grow by between “1.5 to 3.5 per cent” in 2018. Barring unexpected outcomes in the global economy and key sectors in the domestic economy, MTI’s central view is that GDP growth in 2018 is likely to come in around the middle of the forecast range.

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

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