2. Speeches
Opening Remarks by PS Mrs Ow Foong Pheng for 3Q2015 Economic Survey of Singapore
25 November 2015
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ECONOMIC SURVEY OF SINGAPORE (3Q2015)
(25 November 2015)
Opening Remarks
1 Good morning and welcome to MTI.
2 Details of Singapore’s economic performance for the third quarter and the growth outlook for 2015 and 2016 are contained in the press release. Let me highlight a few key points.
3 The Singapore economy eased slightly in the third quarter.
On a year-on-year basis, GDP grew by 1.9 per cent in the third quarter, marginally lower than the 2.0 per cent in the second quarter. Growth was supported by the wholesale & retail trade and finance & insurance sectors.
On a quarter-on-quarter basis, growth momentum picked up slightly, with the economy expanding at a seasonally-adjusted annualised rate of 1.9 per cent, compared to the 2.6 per cent contraction in the previous quarter.
4 Since the start of the year, global economic conditions have remained sluggish. Against this backdrop, the Singapore economy grew at a slower pace of 2.2 per cent in the first three quarters of 2015, compared to 3.2 per cent over the same period a year ago. Growth was primarily weighed down by the weak performance of the manufacturing sector.
5 For the rest of the year, Singapore’s growth is expected to remain resilient amidst a challenging external environment. Sectors such as wholesale trade and finance & insurance are likely to continue to post modest growth, even as the manufacturing sector is expected to remain weak. On the other hand, growth in domestically-oriented sectors like business services and information & communications is likely to remain firm.
6 Taking into account the above factors, MTI expects the Singapore economy to grow by "close to 2 per cent" for the whole of 2015.
7 Looking ahead to 2016, global growth is expected to improve, supported by a strengthening of growth in the advanced economies and improvements in most emerging market and developing economies.
The US economy is likely to grow at a faster pace, supported by domestic demand. First, improvements in the labour market and expectations of higher earnings are likely to support growth in private consumption. Second, marked improvements in the housing market point to a further recovery in residential investments. Third, the non-manufacturing Purchasing Managers’ Index has remained near an all-time high, suggesting a firm recovery in the services sectors.
The pace of growth in the Eurozone economy is projected to be similar to that in 2015. Improving business and consumer sentiments, along with continued monetary easing arising from the quantitative easing measures implemented since March, are expected to support domestic demand in the region.
In Asia, China’s economic growth is expected to moderate further on the back of on-going efforts to rebalance the economy away from industrial production and investment- driven growth towards services and consumption-driven growth. Nonetheless, private consumption in China is likely to remain robust, thus providing support to the economy. In ASEAN, the key economies are generally expected to be resilient, supported by healthy investment growth and improvements in business and consumer sentiments.
8 Even though global growth is expected to improve, the continued slowdown in the Chinese economy, the services-driven nature of growth in the US, as well as the trend of in-sourcing in China and the US may mean that external demand for Singapore and regional countries may not see a significant uplift next year. Domestically, the labour market is also expected to be tight, with the unemployment rate remaining low.
9 Against this backdrop, the growth outlook for the Singapore economy in 2016 remains modest.
While sectors such as finance & insurance and wholesale trade are likely to support growth, the manufacturing sector is likely to remain weak. Sector-specific factors may also weigh on the growth of some sectors. For instance, sustained low oil prices will continue to dampen rig building activities in the marine & offshore segment.
Growth in labour-intensive sectors such as retail and food services may also be weighed down by labour constraints.
10 At the same time, downside risks to the global growth outlook remain.
In China, there is a risk that ongoing reforms to rebalance the economy could falter, leading to a significant drop in demand. The impact could also be amplified through the financial system, thereby leading to an abrupt and sharp fall in China’s growth.
With low commodity prices, the anticipated normalisation of US monetary conditions and volatility in the Chinese stock market, regional countries could face sudden and large capital outflows, resulting in added pressures on their currencies and asset markets.
11 Taking into account the above factors and barring the materialisation of downside risks, the Singapore economy is expected to grow by "1 to 3 per cent" in 2016.
12 Together with my panel members, I will now take your questions.