Singapore GDP growth surges to three-year high

Bloomberg

Singapore’s economic growth quickened to the fastest pace in more than three years last quarter as manufacturing and services rebounded.
Gross domestic product rose an annualized 9.1 percent in the three months to December from the previous quarter, when it declined a revised 1.9 percent, the trade ministry said in a statement on Tuesday.
The median estimate of nine economists in a Bloomberg survey was for a 4 percent expansion GDP rose 1.8 percent in the fourth quarter from a year earlier, compared with the 0.3 percent median estimate in a Bloomberg survey. The economy expanded 1.8 percent in 2016, the slowest pace since 2009
Singapore, among Asia’s most-export dependent nations, is seeking new growth engines to boost incomes as its population ages and trade falters. With global growth under pressure and the U.S. threatening to turn more protectionist under Donald Trump, the outlook remains cloudy. That will be a consideration for the central bank in its April policy review after it signaled in October it will stick to its neutral currency policy for an extended period of time.
“Overall, we are not doing badly, considering the global economic uncertainties,” Prime Minister Lee Hsien Loong said in a New Year message Dec. 31. “While the labor market has eased, unemployment remains low and we are still creating new jobs.”
The Singapore dollar erased an earlier decline after the GDP report, trading little changed at 1.4503 against its U.S. counterpart as of 8:44 a.m.
“I still think Singapore is in a very challenging condition,” said Edward Lee, regional head of research at Standard Chartered Plc in Singapore, who expects 2017 growth to slow to 1.4 percent. “External conditions remain extremely challenging and we certainly have to be watchful for materialization of anti-globalization and anti-trade sentiment.
Any materialization of that will further dampen the already very weak global trade conditions.”“For now, my forecast is that there will be no further easing in April,” he said, referring to monetary policy. “Prospects of a more protectionist trade policy would be negative for Singapore” which is wedded to the old export model and this will have a knock-on impact on domestic incomes, said Weiwen Ng, an economist at Australia & New Zealand Banking Group Ltd. in Singapore. “Domestic demand weakness should continue to weigh on an already subdued labor market.”
The services industry, which accounts for about two-thirds of the economy, rose an annualized 9.4 percent in the fourth quarter from the previous three months. Manufacturing jumped an annualized 14.6 percent. The advance GDP estimates for the fourth quarter are computed largely from data in the first two months of the quarter, and are subject to revision when more comprehensive data become available.

HOME PRICES FALL
FOR THIRD YEAR
Singapore home prices fell 3 percent in 2016, the third straight year of declines as the government held steadfast on property cooling measures.
An index tracking private residential prices fell 0.4 percent in the three months ended Dec. 31 from the previous quarter, according to preliminary data from the Urban Redevelopment Authority released Tuesday. Prices fell for a 13th straight quarter, the longest streak since the data was first published in 1975.
The government has signaled it is reluctant to lift property tightening measures it started implementing seven years ago as it wants to avoid overheating the market again. Singapore doesn’t intend to ease property curbs anytime soon, the central bank’s Managing Director Ravi Menon said in September.
The existing stock of unsold homes may take three years to sell, according to Augustine Tan, president of the Real Estate Developers’ Association of Singapore. In addition to the oversupply, home vacancy rates are at the highest in more than 11 years, Tan said in September.
The residential curbs have included a cap on debt-repayment costs at 60 percent of a borrower’s monthly income, and higher stamp duties on home purchases, after low interest rates and demand from foreign buyers raised concern prices had risen too far too fast. Home values have dropped 11 percent from their 2013 peak, and sales have declined to about half that year’s level.
Still, developers sold 7,769 homes through November, topping the sales tally of 7,440 units recorded in 2015. Sales for 2016 could rise to 8,000 units, according to CBRE Group Inc. Singapore remains a high-end housing market in Asia — the city was ranked the region’s most expensive to buy a luxury home after Hong Kong, according to a 2016 Knight Frank wealth report.
Apartment prices in prime districts remained unchanged last quarter after falling 1.9 percent the previous quarter, the data showed. Suburban apartment prices slid 0.3 percent, while areas near prime districts declined 2 percent.