Singapore’s growth shock masks a duller outlook for economy

Bloomberg

Singapore’s government has a message for anyone expecting great things following Friday’s surprise growth bounce: don’t hold your breath.
The city-state’s economy will still only expand between 1 percent and 3 percent this year, policy makers said after fourth-quarter growth burst in at an annualized 12.3 percent — the fastest pace in more than five years. They had estimated a 9.1 percent reading, largely thanks to a surge in manufacturing fueled by semi-conductor exports tied to China’s supply chain.
“We expect the rebound in electronics and in particular semiconductors to carry on into 2017,” Loh Khum Yean, permanent secretary at the Ministry of Trade and Industry, told reporters. On the other hand, “the picture for the rest of manufacturing and also across the services sector is a bit mixed.” This year’s growth will be “broadly similar” to that of 2016, when the economy expanded 2 percent from the previous year, he said.
The outlook is certainly patchy. The services sector, which accounts for two thirds of the economy, expanded 8.4 percent on an annualized basis. Construction, hampered by long-standing property curbs, was up a mere 0.8 percent. Loh said the retail sector, which grew just 0.6 percent in 2016, remains hindered by online rivalry and slower-than-expected wage growth.
Domestic demand also remains weak, with private consumption falling 2.3 percent in the fourth quarter from a year earlier, the first decline since the 2008-2009 financial crisis.