JULY, 2014

Singapore GDP shrinks in second-quarter

Singapore’s economy contracted in April-June for the first time in seven quarters, hit by a sharp drop in
manufacturing activity, but economists said the weak reading was unlikely to alter the outlook for the
city-state’s tight monetary policy. Singapore’s GDP shrank by 0.8 percent in the second quarter on a
seasonally adjusted and annualized basis, the Ministry of Trade and Industry’s advance estimates
showed on Monday, a much weaker outcome than the median forecast of 2.5 percent growth seen in a
Reuters survey.

The Singapore dollar briefly eased versus the U.S. dollar, reflecting the weaker GDP numbers. The U.S.
dollar was last steady on the day at 1.2412 versus the Singapore dollar, having risen to 1.2421 at one
point. Manufacturing fell 19.4 percent in the second quarter on a quarter-on-quarter, seasonally
adjusted and annualized basis, down sharply from 12.2 percent growth in the first quarter, the data
showed.

The Singapore Economic Development Board has said that a one-off, firm-specific factor had dented
semiconductor production in April, causing a 9.4 percent year-on-year drop that month.
Such shifts in production away from Singapore could persist, given the tightening of restrictions on
foreign workers, and the position of Singapore manufacturers on the low end of the value-added chain,
from where they have struggled to take advantage of demand for sophisticated smartphones and
tablets.

The last time Singapore’s GDP contracted in the seasonally adjusted annualized quarter-on-quarter
advance estimates was in the third quarter of 2012, when GDP shrank 3.6 percent.
The government expects Singapore’s economy to grow 2-4 percent in 2014 after expanding by 3.9
percent last year, and economists have generally tipped full-year 2014 growth to come in near the upper
end of the official forecast.

A survey by the Monetary Authority of Singapore published in June showed that the median forecast of
23 economists surveyed by MAS was for the city-state’s GDP to expand 3.8 percent in 2014. Domestic
policies and restructuring are likely to put upward pressure on domestic inflation, and keeping inflation
expectations at bay will likely remain the priority.

Despite the plunge in manufacturing activity in the second quarter, economists said Singapore’s
economy was likely to be supported in the second half by an expected improvement in growth among
major overseas economies.

August 2016
Singapore Downgrades Its GDP For 2016
Singapore downgraded its forecasts on economic growth and exports for 2016 after confirming a
contraction in output in the third quarter, raising the risk of a recession amid fresh uncertainty around
global trade under U.S. President-elect Donald Trump.

The trade-reliant economy is expected to grow 1.0-1.5% this year, compared with the previous
projection of 1.0-2.0%, the Ministry of Trade and Industry said in a statement on Thursday.
The economy shrank 2.0% in the July-September period from the previous three months on an
annualized and seasonally adjusted basis, the ministry said.
That compared with the government’s initial estimate on Oct. 14 of a 4.1% contraction and a median
forecast of a 2.5% slump in a Reuters’ poll.
The affluent city-state’s economy has been hobbled by dwindling exports amid stubbornly weak global
demand, while domestic consumption has also remained anemic with entire floors at some central
shopping malls empty.

Among the services industries, the financial sector shrank 4.7% on-quarter.
Non-oil domestic exports are seen falling 5.0-5.5% this year, the trade agency International Enterprise
Singapore said in a separate statement, versus a previous forecast of 3.0-4.% contraction.

Activity in the manufacturing sector declined 9.1 percent in the third quarter from the prior three
months, the latest data showed, better than an initial estimate of a 17.4% contraction.

The sector’s outlook remained bearish with exports in October sharply down.
The external and domestic headwinds have raised the risk of a recession in Singapore, and heightened
the chance of fiscal or monetary stimulus over the near term, analysts said. The central bank held its
exchange-rate based policy unchanged in its October meeting, though analysts say a deteriorating
growth outlook could force it to ease again at its next review in April 2017.

With Trump’s Nov. 8 election victory and his campaign promise to tear up international trade deals
threatening to shatter a fragile global recovery, Singapore‘s open economy remains among some of the
most vulnerable markets to U.S. protectionism. Gross domestic product grew 1.1% in the third quarter
from a year earlier, the latest government estimate showed, higher than the advance estimate of 0.6%
growth and a 1.0% expansion in the Reuters survey.

2017
Singapore economy grows 3.5% in 2017, more than double initial forecasts: PM Lee

SINGAPORE'S economy expanded 3.5 per cent in 2017 - more than double initial forecasts - thanks to an
upswing in global growth, Prime Minister Lee Hsien Loong said in his New Year message on Sunday.
Mr Lee said,” Singapore must continue strengthening its position at home and abroad to gear up for the
challenges that 2018 will bring.”

The Singapore economy, which grew 2 per cent in 2016, picked up pace in 2017 on the back of surging
global demand for electronic gadgets. Economists expect this trade-driven lift to continue in the new
year. Growth in 2017 came in at the top end of the Ministry of Trade and Industry's (MTI) forecast, which
has been progressively upgraded over the year. The official prediction, which was between 1 and 3 per
cent in February, has stood at between 3 and 3.5 per cent since November.

In addition, Singapore will take over the chairmanship of the Association of South-east Asian Nations
(Asean) regional bloc in 2018 and hopes to take the group forward under the themes of "resilience" and
"innovation". Singapore will also be pressing on with economic restructuring plans in the coming year.

The Future Economy Council is working closely with unions and businesses to implement Industry
Transformation Maps and help the workforce adapt for the future. More preschools are being built, and
healthcare facilities are expanding. Singapore will also work to meet its environmental commitments
under the Sustainable Singapore Blueprint and the Paris Agreement.
On the infrastructure front, the agenda includes improving rail reliability and growing the MRT network.
Other major projects in the works include Changi Airport Terminal 5, the Tuas Megaport and the High
Speed Rail link to Kuala Lumpur.

Conclusion
Today, the Singapore economy is one of the most stable in the world, with no foreign debt, high
government revenue and a consistently positive surplus. The Singapore economy is mainly driven by
exports in electronics manufacturing and machinery, financial services, tourism, and the world’s busiest
cargo seaport. Singapore’s largest industry by far is the manufacturing sector, which contributes 20%-
25% of the country’s annual GDP.

Close behind Singapore’s manufacturing industry is its financial services industry, which has enjoyed
stable growth due to Singapore’s pro-business environment and political stability. Home to over 200
banks and a regional hub of choice for many global financial services firms, Singapore’s financial services
marketplace facilitates the transfer of knowledge, processes, technology and skills between global,
regional and domestic markets.

Other emerging industries that are making significant contributions to Singapore’s economy include
medical technology, aerospace engineering, clean energy, healthcare, and content development.

References
http://fortune.com/2016/11/23/singapore-2016-gdp-downgrade/
https://www.focus-economics.com/countries/singapore
https://www.businesstimes.com.sg/government-economy/singapore-economy-grows-35-in-2017-more-
than-double-initial-forecasts-pm-lee
https://www.guidemesingapore.com/business-guides/incorporation/why-singapore/singapore-
economy---a-brief-introduction