Singapore Fourth Quarter GDP Growth Slowing

Singapore’s economy is expected to have lost some steam in the fourth quarter, but may show enough momentum to keep alive expectations of a monetary policy tightening next year.

Gross domestic product in the October-December quarter is expected to grow 2.7% compared with the same period a year earlier, according to the median forecast in a Reuters survey of 10 economists.

In the third quarter the economy grew 5.2%, the quickest year-on-year expansion in nearly four years, thanks to a boom in manufacturing that some analysts say will encourage tighter monetary policy in 2018.

“While we expect some moderation of momentum, growth likely remains constructive, supported by manufacturing,” said Jeff Ng, chief economist, Asia at Continuum Economics.

The government’s advance estimate of fourth quarter GDP will be released on Jan. 2. A comparison against a high base recorded a year earlier is seen likely to have a tempering effect on year-on-year growth.

Data released on Tuesday showed industrial production in November rose less than expected from a year earlier, reinforcing expectations for slower year-on-year economic growth in the fourth quarter.

GDP growth is also expected to slow on a quarter-on-quarter and annualized basis to 2.9%, from 8.8% in the third quarter.

Still, the economy appears to be doing well enough for the Monetary Authority of Singapore to consider tightening monetary conditions at its next policy review in April, said Hirofumi Suzuki, an economist for Sumitomo Mitsui Banking Corporation.

“Other countries are gradually tightening their monetary policies, and it’s not as if Singapore’s economic conditions are particularly weak,” he said.

Suzuki added, however, that his baseline view is for the MAS to keep policy unchanged in April as inflation remains subdued.

Singapore’s trade-reliant economy has enjoyed a boost this year from an improvement in global demand, particularly for electronics products and components such as semiconductors.

In November, the government revised up its 2017 GDP growth forecast range to 3-3.5%. Such a pace of growth would be the fastest since 2014, when GDP expanded nearly 3.6%. The government expects the economy to grow 1.5 to 3.5% in 2018.