SINGAPORE (July 13): RHB Research is maintaining its forecast for 2018 GDP at 3%, given moderating exports and the shift towards a more moderate semiconductor cycle this year.
Singapore’s economic growth is expected to stay resilient as exports continue to grow, says RHB, while domestic demand is also expected to be resilient throughout the year driven by regulatory-led machinery upgrades.
While slowing external trade is likely continue to weigh down trade-related activities and new tightening measures on the property market should keep growth in check for the rest of the year, RHB says this would be mitigated by buoyant modern services such as financial and information & communications services.
See: Singapore raises ABSD, tightens LTV after strong property price gains
Preliminary data released by the Ministry of Trade and Industry this morning showed Singapore’s gross domestic product (GDP) in 2Q18 increased by 3.8% y-o-y, below consensus estimate of 4.1% and 4.4% reported in 1Q18. This was mainly due to the slowdown in the manufacturing and services sectors while construction activities declined.
During the quarter, manufacturing production grew at a slower pace of 8.6% y-o-y, slowing down from a 9.7% increase in the previous quarter, driven mainly by the electronics and biomedical manufacturing clusters.
“Overall, the manufacturing sector remains in a healthy state and is still expected to drive Singapore’s economy going forward as growth in the sector continues to outpace GDP growth,” says RHB.
The services sector also saw growth easing to 3.4% y-o-y in 2Q18, lower than 4% in 1Q18, mainly supported by the finance & insurance and wholesale & retail sectors.
In addition, construction activities slowed during the quarter, recording a 4.4% y-o-y growth, compared to 5.2% in 1Q18, amid lacklustre performance in the private sector construction demand.
Furthermore, the government last week announced a five percentage point increase in stamp duty for some home buyers and tightened housing loans, in an effort to cool the property market and keep price increases in line with economic fundamentals.
