Opening Remarks by PS Mrs Ow Foong Pheng for Economic Survey of Singapore (2013)

1. Good morning and welcome to MTI.

2. The Singapore economy performed well in the last quarter of the year and for the whole of 2013.

• On a year-on-year basis, GDP grew by 5.5 per cent in the fourth quarter, following the 5.8 per cent in the previous quarter.  On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 6.1 per cent, significantly higher than the 0.3 per cent growth in the previous quarter.

• For 2013 as a whole, the economy expanded by 4.1 per cent, higher than the 1.9 per cent in 2012. Growth was mainly supported by robust expansion in the finance & insurance and wholesale trade sectors. The manufacturing sector also expanded at a faster pace, on the back of strong growth in the transport engineering cluster and the electronics cluster.

3. The global economic outlook is expected to improve modestly in 2014, supported by a sustained but slow recovery in the US and the Eurozone economies.

• Growth in the US economy is expected to improve in 2014, due in part to the easing of fiscal cutbacks, and supported by rising private consumption expenditure and business investments. 

• The recovery in the Eurozone is also expected to gain traction. Forward-looking indicators such as the Economic Sentiment Indicator and the composite Purchasing Managers Index (PMI) have continued to improve. Overall, economic growth in the Eurozone is projected to strengthen in 2014, with all the major Eurozone economies expected to return to growth.

•  In Asia, China’s growth is expected to moderate slightly as the government continues with reforms to rebalance the economy towards consumption-driven growth. Key ASEAN economies are expected to remain resilient despite recent pressures on their financial markets and currencies. First, countries like Indonesia and Malaysia have taken concrete steps to strengthen their fiscal positions, such as through subsidy rationalisation. Second, improvements in the advanced economies should help to support the exports of ASEAN economies.

5. Nonetheless, uncertainties in the global macroeconomic environment remain. In the US, uncertainties regarding the pace of QE tapering could weigh on the financial markets and business sentiments in the short term. In China, as the government carries out policy adjustments to rebalance the economy, there could be unintended consequences, such as an excessive tightening of credit that could lead to a sharper-than-expected economic slowdown.

6. Against this macroeconomic backdrop, the Singapore economy is expected to post modest growth in 2014.

• Externally-oriented sectors such as manufacturing and wholesale trade are likely to continue to recover and provide support to growth, in tandem with the recovery in global demand.

• However, tightness in labour conditions could weigh on growth in some labour-intensive, domestically-oriented sectors.

Taking these factors into consideration, the 2014 growth forecast for the Singapore economy is maintained at 2.0 to 4.0 per cent.

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