Singapore's Q4 growth eases to 4.4%

20140103-bt-sg-q4-gorwth-eases-to-4.4-percent-pic120140103-bt-sg-q4-gorwth-eases-to-4.4-percent-pic2 [SINGAPORE] Economic growth eased more than expected in the final quarter of 2013, even as the Republic turned in a better full- year performance, preliminary government estimates released yesterday showed.

Coming two days after Prime Minister Lee Hsien Loong disclosed the full-year growth figure for 2013, which was better than first thought, the Ministry of Trade and Industry's (MTI) "advance estimates" showed that the economy grew 4.4 per cent year-on-year in the last quarter of last year, down from an upward revision of 5.9 per cent (from 5.8 per cent) in the third quarter.

The growth was also below the 4.8 per cent increase that the market had expected.

Based largely on data from the first two months of the quarter, the advance estimates showed growth momentum faltering in Q4 - just when global markets were picking up.

The economy dipped a seasonally adjusted annualised 2.7 per cent from Q3, after a revised 2.2 per cent rise (from 1.3 per cent) in the previous quarter.

It was the first quarter- on-quarter decline in more than a year. And while private-sector economists saw it coming, they had forecast a 1.3 per cent drop.

For the full year, the economy is likely to have expanded 3.7 per cent year- on-year, up from 1.3 per cent growth in 2012.

The slowdown in Q4 cut across all major sectors. MTI blamed a slower rise in transport engineering output and a "sharper contraction" in the volatile biomedical industry for the growth moderation in manufacturing, which eased from 5.3 per cent in Q3 to 3.5 per cent.

Slower growth in private-sector construction works trimmed construction growth to 4.7 per cent from 5.8 per cent. A similar slowdown in the wholesale & retail and finance & insurance businesses eased services growth from 6.5 per cent in Q3 to 5.5 per cent in Q4.

On a quarter-on-quarter basis, the services sector, which has been the main prop of Singapore's growth in recent years, slipped an annualised 1.7 per cent. In fact, all three key sectors - manufacturing (-4 per cent), construction (-6.9 per cent) and services - shrank in quarter-on-quarter terms in Q4.

Noting in a brief report that it was services' first decline in two years, Barclays' Joey Chew said the decline partly dragged down Q4's economic growth. The other cause was the upward adjustment in Q3 growth.

The Q4 slowdown drew mixed reactions from economists on growth prospects for this year.

MTI seemed to take a cautious stand in keeping the 2-4 per cent growth forecast it first made in November last year.

Citigroup's Kit Wei Zheng maintained his 3.5 per cent growth projection, but said that "weaker- than-expected Q4 growth implies a slightly weaker starting point for 2014 GDP and suggests stronger (global) demand has yet to translate into a sustained growth" here.

Chua Hak Bin of Bank of America Merrill Lynch expected the economy to lose steam in Q4 and thought that the ongoing economic restructuring and tighter foreign worker policy would stand in the way of Singapore fully catching a global demand upswing.

Dr Chua tipped the economy to grow 3.2 per cent year-on-year in 2014, among the lowest projections by private-sector economists.

Barclays' Ms Chew feels that domestic factors will cause growth this year to "be slightly softer versus 2013".

ANZ's Glenn Maguire said that while the economy's Q4 performance was disappointing, there was no cause for alarm. The "uniform growth upswing" in the US, Europe and Japan will smoothen Singapore's growth path and restructuring, he reckoned.

ANZ maintained that the economy will grow 3.2 per cent this year - "slightly above the midpoint" of the official forecast.

DBS, Credit Suisse and UOB believe that stronger external demand favours stronger economic growth in 2014. Credit Suisse has raised its 2014 growth forecast from 3.7 per cent to 4 per cent, the same as DBS's forecast.

UOB has pencilled in growth of 4.3 per cent, the most upbeat projection.

DBS's Irvin Seah dismissed the advance GDP estimates, particularly for the quarter-on-quarter figures, saying they have been "rather unreliable" in recent years. "So take this figure (-2.7 per cent) with a pinch of salt," he said. "Our take is that it could be revised up to a less severe contraction of about -0.8 per cent when the final figure is out."

Source: Business Times, 3 Jan 2013