Illustrative photo (Source: Lin Zhaowei for The Straits Times)
Singapore’s economy likely maintained a steady pace of growth in the fourth quarter as the manufacturing sector outperformed forecasts, but US-China trade tensions could slow the momentum in 2019.
According to the median forecast of nine economists in a Reuters survey, the country’s gross domestic product (GDP) in October-December was estimated to expand 2.3 percent from the same period a year earlier, slightly faster than growth of 2.2 percent in the third quarter.
Chua Hak Bin, a Maybank Kim Eng economist, forecast that the manufacturing recovery in the fourth quarter of 2018 may be short-lived, driven largely by front-loading of exports before potential US tariff hikes on China goods.
The Singaporean Ministry of Trade and Industry plans to release advance fourth-quarter and full-year 2018 GDP estimates on January 2.
Some economists said that while the trade-reliant economy’s growth is expected to slow this year, it may still expand at a sufficiently robust pace to justify more tightening by the Monetary Authority of Singapore.
“We are looking at further tightening of monetary policy in April,” said UOB economist Alvin Liew.
But he said risks to his outlook for 2019 were any sudden worsening of US-China trade tensions as well as a significant drop in oil prices.
Singapore’s central bank tightened monetary policy twice in 2018. It said its latest tightening in October was driven by solid domestic factors, including improving labor market conditions, core inflation approaching 2 percent and an economy running slightly above potential.
The Singaporean government forecast the 2018 GDP growth to come in at between 3.0 and 3.5 percent versus a three-year high of 3.6 percent in the previous year. It has a wide range for 2019’s GDP growth forecast of 1.5 to 3.5 percent./.