Singapore Q4 GDP seen revised lower, pressure for easing grows

[SINGAPORE] Singapore's economy is forecast to have grown at a slower pace in the fourth quarter than initially thought, underscoring why some analysts expect more monetary stimulus at the April review given a weakening outlook amid slackening global demand.

The median forecast in a Reuters poll predicted that gross domestic product (GDP) expanded 4 per cent on an annualised basis in the October-December quarter from the previous quarter.

The government's advance estimate of Q4 GDP released on Jan 4 put economic growth at 5.7 per cent as the services sector picked up the slack from weakness in the city-state's export-oriented manufacturing sector.

But the economy remains fragile, with recent data showing that industrial production in December posted its weakest year-on-year reading in eight months.

Given the run of weak data and gloomy outlook for the city state's economy, analysts say the prospect of Singapore's central bank easing monetary policy at its scheduled policy review in April is rising.

"Our house view is still no change. But clearly we recognise that the risk of some further easing has certainly increased," said Brian Tan, an economist for Nomura.

Against a backdrop of low inflation and tepid global growth, the Monetary Authority of Singapore eased its exchange-rated based monetary policy twice last year, most recently in October.

Mr Tan said there were also domestic headwinds to growth, such as rising local interest rates, a slowing property market and restrictions on the hiring of foreign workers.

While low global demand has hit exports, falling oil prices have also dented industrial production by dampening demand for offshore drilling rigs.

Year-on-year growth in the fourth quarter is seen revised to 1.8 per cent, the median forecast in the Reuters poll of 14 economists showed, down from the initial estimate of 2 per cent growth.

Economists say the government is likely to maintain its 2016 growth forecast of one per cent to 3 per cent. Full-year growth will probably slow to 1.8 per cent in 2016, Mr Tan said.

According to the advance estimate, GDP grew 2.1 per cent last year, the weakest performance since 2009, when the global financial crisis shrank economic output by 0.6 per cent.

The government will report detailed data on October-December GDP on Feb 24 at 8am local time (0000 GMT).

REUTERS