S'pore shaves 2016 growth forecast to 1-1.5%; Q3 growth revised upwards to 1.1%

SINGAPORE shaved off the top half of its 2016 growth forecast again on Thursday. The government now predicts a one to 1.5 per cent growth rate for the year and 2017 growth at one to 3 per cent, even as third-quarter growth numbers were generally revised upwards from earlier flash estimates.

Singapore's third-quarter growth is now at 1.1 per cent year on year, faster than an October flash estimate of 0.6 per cent, but still slower than Q2's 2 per cent, said the Ministry of Trade and Industry (MTI) said in a release on Thursday morning.

On a quarter-on-quarter seasonally adjusted annualised basis, the economy contracted by 2 per cent, narrower than the previous estimated 4.1 per cent shrink. But it was still worse than the 0.1 per cent growth in the second quarter.

With only a quarter left to go for 2016, MTI said the Singapore economy's full-year growth, now at between one per cent and 1.5 per cent, is "likely to come in marginally weaker than in 2015" when it grew 2 per cent.

This is a step down from an earlier revision in August of one to 2 per cent, but has already been foreshadowed by an October official update that growth for 2016 will come in at the "lower end" of one to 2 per cent.

The August forecast itself was also a narrowing of the original one to 3 per cent range.

Looking ahead, even though global growth is expected to pick up modestly, "the elasticity of trade to global growth is likely to remain weak", a pullback from investors in the United States and China, as well as insourcing trends in China will drag on external demand for Singapore's trade-reliant economy, said MTI.

In addition, global downside risks remain, said MTI. These include the uncertainty from Brexit, or the UK's vote to leave the European Union. This is especially since the timing and nature of the exit remain unresolved.

China's economy is also still facing the risk of debt defaults, leading to a tightening of financial conditions.

Thirdly, political risks and uncertainties have risen, noted MTI, including "an increasing backlash against globalisation" that could further weaken global trade.