Singapore’s GDP grew by 2% in Q4 of 2015

Singapore grew a surprise 5.7 percent on-quarter on an annualized basis in the final three months of 2015, data released Monday showed, but a more tepid 2.1 percent for the full year.

Although the economy has ended 2015 with a fairly healthy growth pace in the fourth quarter, overall GDP growth is still the slowest in six years.

The construction sector expanded by 2.2 per cent on a year-on-year basis in the fourth quarter, an improvement from the 1.1 per cent growth recorded in the previous quarter.

“Even though this number is stronger than expected, it remains sub-potential and that sort of “not that great” growth scenario is present throughout Asia right now”, said Vaninder Singh, an economist for RBS.

Singapore’s manufacturing engine remained weak as the sector contracted for the fifth consecutive quarter to register a decline of 6.0% y/y due to the decline in output from the electronics, transport engineering and precision engineering clusters. The manufacturing sector underperformed, shrinking 3.1 percent.

Services sectors in many other Asian countries are not as developed as they are in Singapore, an established global financial centre, he said.

Although Singapore’s manufacturing sector is not out of the doldrums yet, we remain optimistic that there could be some pickup in manufacturing growth in2016 and we are projecting the manufacturing sector to grow by a modest 2.5%, compared to the 4.8% decline in 2015. “External competition, rising business costs and weak external demand were key challenges facing the manufacturing sector for the past years”, he said. And the outlook is expected to remain dicey judging from conditions in the external environment.

Growth in the services producing industries came in at 3.2 per cent year-on-year in the fourth quarter, easing slightly from the 3.4 per cent growth in the previous quarter. The government estimate beat analysts’ expectations as improvements in the construction and services sectors countered faltering exports.

A sharp acceleration in construction and service sector activity, up 6.5% and 7.0% respectively in SAAR terms, was able to offset a a 3.1% contraction in manufacturing output.

China’s factory activity contracted for the 10th straight month in December, a private-sector survey showed on Monday, dampening hopes that the world’s second-largest economy will enter 2016 on steadier footing.

Preliminary GDP estimates for the fourth quarter and the whole of 2015, including performance by sectors, sources of growth, inflation, employment and productivity, will be released in February, MTI said.