Singapore’s economy expanded less than economists estimated last quarter after its manufacturing industry weakened with slowing growth in China and an uneven global recovery.
Gross domestic product rose an annualized 1.6 percent in the three months to Dec. 31 from the previous quarter, when it expanded 3.1 percent, the trade ministry said in a statement today. The median of five estimates in a Bloomberg News survey was for a 3 percent expansion.
Singapore’s productivity growth has been weak, Prime Minister Lee Hsien Loong said on Dec. 31, and the trade ministry has said the economic outlook for 2015 is “modest” with a tight labor market restraining some industries. The export-dependent island is also adjusting to a China on track to record its weakest full-year growth in almost a quarter century, even as the U.S. saw its biggest expansion in more than a decade in the third quarter.
“It caps a pretty moderate year for growth,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG, who predicts the Southeast Asian nation will expand 3.5 percent in 2015. “China’s slowing, Japan’s pretty moribund, Europe’s still essentially going nowhere,” with only the U.S. providing some relief in the global economy.
A Chinese manufacturing gauge slipped to the lowest level in 18 months in December, data showed yesterday, adding to evidence that the economy probably grew last year at the slowest pace since 1990, according to analysts surveyed by Bloomberg News. Meanwhile, the U.S. expanded at a 5 percent annualized rate in the three months ended in September, and a report this week showed consumer confidence at a near seven-year high.
Singapore’s GDP grew 1.5 percent in the three months through December from a year earlier, compared with a median estimate of 1.8 percent, today’s report showed. The economy expanded 2.8 percent last year, according to the advance estimates which are computed largely from figures in the first two months of the quarter and may be revised.
Singapore’s manufacturing fell 5.8 percent last quarter from the previous three months, the trade ministry said. The services industry grew 3.8 percent in the same period, while construction expanded 8 percent.
Manufacturing also contracted from a year earlier, mainly due to a decline in the output of the transport engineering, electronics and general manufacturing clusters, the report said. Growth in construction was mainly supported by public sector activities, it said.
“If you look forward into 2015, I think there’s probably a bit more reason to think that it should improve,” said Wan. “You do have oil prices coming down, and that should be a boon for consumers, especially in the developed world, and I think that should be a positive for an open economy like Singapore.”