Opening Remarks by PS Mrs Ow Foong Pheng for 3Q13 Economic Survey of Singapore
Good morning and welcome to MTI.
Details of Singapore’s economic performance for the third quarter and the growth outlook for 2013 and 2014 are contained in the press release. Let me highlight a few key points.
The Singapore economy continued to perform well in the third quarter of 2013.
- On a year-on-year basis, GDP grew by 5.8 per cent in the third quarter, compared to 4.4 per cent in the previous quarter. The pick-up in growth was mainly due to robust growth in the manufacturing, wholesale & retail trade, and transportation & storage sectors.
- On a quarter-on-quarter basis, the economy grew at a seasonally-adjusted annualised rate of 1.3 per cent, after expanding by 17.4 per cent in the previous quarter.
For the rest of the year, we expect externally-oriented sectors like manufacturing, wholesale trade and transportation & storage to support growth, in line with the slight pickup in the global economy. Notably, Singapore’s manufacturing Purchasing Managers’ Index rose to a three-month high in October, alongside an improvement in new export orders. Domestically-oriented sectors such as construction and business services are also expected to remain resilient in the fourth quarter.
In view of these factors, MTI expects the Singapore economy to grow by 3.5 to 4.0 per cent for the whole of 2013, an upgrade from the earlier forecast of 2.5 to 3.5 per cent.
For 2014, the global economy is expected to continue to improve modestly, supported by a sustained but slow recovery in the US and Eurozone.
- Barring further fiscal cutbacks, the US economy is likely to improve in 2014, supported by rising private consumption expenditure and business investments.
- The Eurozone is on a modest recovery path after emerging from a long recession in the second quarter of the year. Improving sentiments and a rising Composite Purchasing Managers’ Index suggest that the nascent recovery should gain traction in the coming quarters.
- In Asia, the recovery in the advanced economies is likely to lift export demand. However, growth is likely to remain moderate given on-going reforms in China to re-balance the economy towards consumption-driven growth. Some ASEAN economies like Indonesia and Malaysia have also embarked on fiscal consolidation measures.
Notwithstanding our expectations of a modest recovery in the global economy, risks to the global growth outlook remain.
- There are uncertainties over how markets will react to the possible tapering of the quantitative easing programme by the US Federal Reserve, and whether the debt ceiling in the US will be raised in a timely manner.
- In the Eurozone, there could be periodic flare-ups of the sovereign debt crisis, as peripheral economies may require further assistance to reduce their debt burden.
- In China, as the government adjusts its policies to promote more sustainable growth, there could be unintended consequences, such as an excessive tightening of liquidity, which could lead to a sharper-than-expected slowdown in growth.
Against this macroeconomic backdrop, the growth outlook for the Singapore economy remains modest.
- Externally-oriented sectors such as manufacturing and transportation & storage are likely to provide support to growth, in line with the gradual pickup in the global economy.
- Domestically-oriented sectors such as business services are also expected to remain resilient. However, tightness in labour market conditions may weigh on growth in some labour-intensive sectors.
Taking into account the above factors and barring downside risks, the Singapore economy is expected to grow by 2 to 4 per cent in 2014.
Together with my panel members, I will now take your questions.