Quick takes: Singapore Q4 2015 growth beats forecasts

THE Singapore economy grew at a better-than-expected 2.0 per cent on a year-on-year basis in the last quarter of 2015, advanced estimates show, and is expected to register a full-year growth of 2.1 per cent in 2015.

Here are some comments from economists and analysts:

Weiwen Ng, economist, Asean and Pacific, ANZ Research: "Today's firm advance GDP print belies a more mixed underlying picture of fluid and brittle drivers within the Singapore economy which is confronted with twin headwinds externally and domestically. . .

"Services outperformance remains the key support of economic growth, but the jury is out on the sustainability of its strength. For the financial services sector, further regulatory scrutiny and a deteriorating market environment with net interest margins under pressure, means that banks will have to be much more agile to the changing external environment to drive growth or risk of underperforming."

DBS: "Once again, the service sector is in the driving seat. Growth is expected to register a solid 6.5 per cent quarter-on-quarter seasonally adjusted annualised basis (3.2 per cent year-on-year). Note this sector accounts for about two-thirds of the economy. A good showing from this sector will lift the boat.

"Unsurprisingly, the manufacturing sector remains the weakest link. A contraction of 3.1 per cent QoQ saar (-6.0 per cent year-on-year) was reported. . .

"Although the economy has ended 2015 with a fairly healthy growth pace in the fourth quarter, overall GDP (gross domestic product) growth is still the slowest in six years. Moreover, risks remain in the horizon with potential capital flight that could result from further US rate hikes and/or fears of further deceleration in China."

Mizuho Bank: "Headline cheer but masks somewhat more grim underlying realities beneath.

"Fact is, due to a confluence of structural and cyclical impediments, the manufacturing sector looks like it is in store for a long hard slog back to growth. This means that the services sector will have to continue to bear a disproportionate burden of spurring growth in the economy. And even this may be hampered. A cooling property market holds back the nascent recovery set to take shape in H2 2016 by dampening services, construction and softening the job market at the margin.

"To be sure, some of the cyclical (external) headwinds to manufacturing could begin to ease as China stimulus kicks in and global demand recovery broadens modestly. And if oil prices manage to stabilize a little higher into late-2016, that could also provide some relief for oil-related industries and rig-builders.

"But in all likelihood this will be welcome but insufficient relief to revive the economy."