Singapore: Q4 GDP growth slowed to 3.1% - Nomura

The Singapore government’s advance estimates show GDP growth slowed to 3.1% y-o-y in Q4 2017 from 5.4% in Q3, but this was still above expectations (Nomura: 2.1%; Consensus: 2.6%), notes the research team at Nomura.

Key Quotes

“In sequential terms, growth slowed sharply to 2.8% q-o-q saar from 9.4% in Q3. This brought full-year 2017 growth to 3.5% from 2.0% in 2016, which is at the top end of the government’s 3.0-3.5% forecast range.”

“The upside surprise came from services sector growth, which held up at 3.0% y-o-y in Q4, slowing only slightly from 3.2% in Q4. This partly offset the sharp slowdown in manufacturing sector growth to 6.2% y-o-y from 19.2% in Q3. The construction sector also continued to decline, by 8.5% y-o-y, deepening from the 7.7% decline in Q3.”

“Overall, we expect the slowdown in Q4 to continue and forecast full-year 2018 GDP growth at 2.2%, within the official forecast range of 1.5-3.5%. We believe underlying growth remains lacklustre and not broad-based: excluding semiconductors, we estimate GDP growth fell to 1.7% y-o-y in Q4 from 3.2% in Q3. The broader economy will likely remain saddled by structural headwinds ranging from unfavourable demographics and weak productivity growth to rising structural unemployment, rendering it susceptible to a downturn in the electronics cycle.”