Finance and insurance sector drives GDP engine
It outperforms all others in pace of growth and productivity for Q4 and 2014 as a whole, says MTI
Singapore
THE finance and insurance sector revved up the Singapore economy for the second year running, outperforming all other sectors in pace of growth and in productivity level in the fourth quarter and for the year as a whole, the Ministry of Trade and Industry (MTI) said on Tuesday.
The sector surged 10 per cent in the fourth quarter compared to a year ago, boosted by "sentiment-sensitive" activities such as forex trading and fund management, said MTI. The insurance industry also powered ahead.
The sector zipped past all others, with its growth persisting from the year-on-year rise recorded in the third quarter at 9.9 per cent. The next-highest growth was posted by the IT sector.
For the full year, the sector finished with a strong 7.7 per cent expansion; the gain was weaker than the 12.2 per cent growth in the previous year, though this had been anticipated by the central bank.
Growth from the sector - while still to be good - will ease further this year, said Jacqueline Loh, deputy managing director at the Monetary Authority of Singapore, at a briefing. She pointed to risks stemming from weakening global growth forecasts and, in particular, lingering concerns over the outlook of the eurozone, China and the emerging economies. "We remain watchful on that," she told reporters on Tuesday.
Still, the gains from the finance and insurance sector contributed the most to Singapore's gross domestic product (GDP) last year, MTI said.
Fund managers performed well in light of market conditions, said Ms Loh. The general insurance sector had its operating profit lifted by nearly 40 per cent from a year ago amid more demand overall.
Singapore's foreign exchange market - ranked third-largest in the world - posted an average daily turnover of US$340 billion (S$460 billion) in 2014, up 0.83 per cent from the previous year, with the dollar-yen currency pair most actively traded.
Aside from outdoing other segments in productivity growth, the finance and insurance sector grew its productivity by 5.1 per cent - remarkable when overall labour productivity fell 1.5 per cent in the quarter, representing the third straight decline.
This comes as the sector created more jobs in 2014 than a year ago. This was a critical reversal as the number of jobs created on a net basis had been falling for three straight years since 2011.
Separate and preliminary data from the Department of Statistics showed 9,200 new jobs were created last year, more than double the 4,600 jobs created in 2013.
In a speech last year, Finance minister Tharman Shanmugaratnam had flagged this as a concern, and urged banks to build specialists as technology reinvented the industry.
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