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Singapore sees more than 2% GDP growth
SINGAPORE (Reuters) – Singapore expects its economy to grow more than 2 percent this year on improving overseas demand after GDP contracted less than initially estimated in the first quarter, but it warned of risks to the outlook from tightening financial conditions in China.
The city state has been among a number of export-reliant Asian economies to benefit from a general uptick in global demand from late last year, enjoying strong sales of its tech products.
The positive momentum saw its economy avoid a deeper slump in the first quarter, shrinking 1.3 percent from the previous three months on an annualised and seasonally adjusted basis, compared to the government’s initial estimate in April of a 1.9 percent contraction.
The data released by the Ministry of Trade and Industry (MTI) yesterday was slightly worse than the median forecast in a Reuters survey of a 1.0 percent slump.
MTI kept its 2017 GDP forecast unchanged at 1.0 to 3.0 percent this year, but said that growth is likely to come in higher than 2.0 percent “barring the materialisation of downside risks”, and supported by an improving outlook for advanced economies.
The government revised up its export forecasts for 2017 to 4.0 to 6.0 percent growth from 0.0 to 2.0 percent previously. In the first quarter, the manufacturing sector grew 8 percent year-on-year after a 11.5 percent expansion in the previous quarter.
Despite the upbeat tone, however, the government warned of risks to the growth outlook from tightening financial conditions in China and policy uncertainties in the United States and Britain.
“Should there be a steeper-than-intended pullback in credit in China, investment spending and hence growth in China could slow down more sharply than expected,” MTI said.
Some analysts were equally cautious, warning that protectionism and China’s tighter policy stance could hurt trade and spill over to regional economies.
“Wednesday’s Moody’s downgrade for China is very much a similar picture being painted that mounting debt and slowing growth are risks on the horizon,” said Selena Ling, head of treasury research and strategy at OCBC.
Moody’s Investors Service downgraded China’s credit ratings on Wednesday, saying it expects the financial strength of the economy will erode in coming years as debt continues to rise.
While Singapore’s exports bounced in the first quarter, weak shipment numbers in April stoked worries that the city state is overly dependent on the electronics sector as well as trade with China.
Electronic exports in April rose 4.8 percent, slowing from 5.2 percent annual growth in March and some analysts warn that demand has peaked.
The Monetary Authority of Singapore kept policy steady in April and signalled that a “neutral” stance would be needed for an extended period amid lingering risks to the global outlook.
Source: http://www.khmertimeskh.com/news/38731/singapore-sees-more-than-2–gdp-growth/