Singapore's fourth quarter GDP growth below forecast as trade concerns darken outlook

  • The trade-reliant economy grew 1.6 percent in the October-December period from the previous three months on an annualized and seasonally adjusted basis, the Ministry of Trade and Industry said in a statement, slower than expectations.
  • Some economists have said that while growth is expected to slow in 2019, it may still expand at a sufficiently robust pace to justify more tightening by the Monetary Authority of Singapore.
A general view of Marina Bay Sands on September 20, 2016 in Singapore.
Rustam Azmi | Getty Images
A general view of Marina Bay Sands on September 20, 2016 in Singapore.

Singapore's economy grew more slowly than forecast in the fourth quarter after the manufacturing sector shrank, adding to concerns that a trade dispute between the United States and China will drag on growth in 2019.

Rising trade protectionism and uncertainty over U.S.-China relations are key risks for the city-state in the coming months although the impact from trade frictions have so far had only a limited impact on its small and open economy.

The trade-reliant economy grew 1.6 percent in the October-December period from the previous three months on an annualized and seasonally adjusted basis, the Ministry of Trade and Industry said in a statement, slower than expectations.

On a quarter-on-quarter seasonally-adjusted annualized basis, the manufacturing sector shrank 8.7 per cent, reversing from 3.1 percent growth in the third quarter, data showed.

Gross domestic product was forecast to have expanded 3.2 percent in the fourth quarter from the previous three months, according to six economists surveyed by Reuters. The economy grew a revised 3.5 percent in the previous quarter.

From a year earlier, the economy grew 2.2 percent in the fourth quarter, compared with the median forecast of 2.3 percent in the Reuters survey and a revised 2.3 percent growth in the third quarter.

The economy expanded 3.3 percent for all of 2018, slowing from a three-year high of 3.6 percent the prior year. The government's forecast for 2018 growth had been 3.0 to 3.5 percent.

Singapore is considered a bellwether for global growth because international trade — equating to about 200 percent of its GDP — dwarfs its domestic economy.

Some economists have said that while growth is expected to slow in 2019, it may still expand at a sufficiently robust pace to justify more tightening by the Monetary Authority of Singapore.

However, a significant deterioration in the growth outlook will increase the odds for the central bank to stay on hold in April when it makes its next decision.

The government has a wide range for 2019's GDP growth forecast of 1.5 to 3.5 percent.