Opening Remarks by PS Mrs Ow Foong Pheng for 1Q2014 Economic Survey of Singapore

1 Good morning and welcome to MTI.

2 Details of Singapore’s economic performance in the first quarter and the growth outlook for 2014 are contained in the press release. Let me highlight a few key points.

3 The Singapore economy continued to perform well in the first quarter of 2014. 

• On a year-on-year basis, GDP grew by 4.9 per cent in the first quarter, similar to the rate of growth achieved in the previous quarter. Growth was supported by a rebound in the manufacturing sector and continued strength in the wholesale trade sector.
  

• On a quarter-on-quarter basis, the economy grew at a seasonally-adjusted annualised rate of 2.3 per cent, moderating from the 6.9 per cent growth in the preceding quarter.

4 For 2014, the global economy is expected to continue to improve modestly, supported by a sustained recovery in the US and Eurozone economies. 

• We expect the US economy to post modest growth in 2014. Private consumption expenditure is expected to rise on the back of improvements in household wealth and consumer sentiments. Business investments are also likely to recover, as business sentiments towards capital spending continue to improve.

• The Eurozone economy is expected to return to growth this year, after contracting the year before. The improvement in economic outlook can be attributed to a reduced pace of fiscal tightening and a highly accommodative monetary policy. Forward-looking indicators, such as the Purchasing Managers’ Index, also continue to point towards growth in the economy.

• In Asia, China’s growth is expected to moderate slightly as the government continues with credit tightening measures as well as reforms to re-balance the economy. Meanwhile, the ASEAN economies are likely to remain resilient, supported by robust domestic demand. The continued recovery in the global economy will also lift the demand for exports from ASEAN economies. 

5 However, there are always

downside risks.

• In the US, there are uncertainties over the pace at which the Federal Reserve will exit from its accommodative monetary policy. An unexpected tightening of monetary conditions would weigh significantly on financial markets and business sentiments in the US. It could also lead to more volatile capital flows, which could in turn adversely affect emerging market economies.  

• In China, there is a risk that policy moves to rein in credit growth may lead to a sharper-than-expected economic slowdown if the policies are not well calibrated.

6 Against this macroeconomic backdrop, the Singapore economy is expected to grow modestly in 2014. 

• This is because we expect externally-oriented sectors such as manufacturing and wholesale trade are likely to provide support to growth, in line with the gradual pickup in the global economy.

• Domestically-oriented sectors such as business services are expected to remain stable. However, continuing tightness in the labour market is expected to weigh on growth in some labour-intensive sectors. 

7 Taking these factors into consideration, the 2014 growth forecast for the Singapore economy is maintained at 2 to 4 per cent.

8 Together with my panel members, I will now take your questions.