Quick takes: Surprise jump in Q4 boosts Singapore's overall GDP growth in 2016

THE Singapore economy grew by 2.9 per cent year-on-year in the final quarter of 2016, lifted by strong performance of the manufacturing sector.

This brought the full-year expansion in 2016 to 2.0 per cent, compared to the 1.9 per cent growth in 2015, the Ministry of Trade and Industry said on Friday.

On a quarter-on-quarter seasonally-adjusted basis, the economy grew an annualised 12.3 per cent, a rebound from the 0.4 per cent slump in Q3.

The manufacturing sector, which grew by 11.5 per cent year-on-year in Q4 of 2016, accelerated from the 1.8 per cent growth in the previous quarter.

The trade ministry expects the Singapore economy to grow at a modest pace of 1.0 to 3.0 per cent in 2017.

Here's some economists' comments:

Irvin Seah, DBS:

"The key driver in 4Q16 was a 21 per cent year-on-year surge in December industrial output. Key electronics and biomedical clusters, which accounted for close to 50 per cent of total manufacturing output, were on a solid run in the quarter.

"Given the significant revisions made to the GDP figures for the past few quarters, as well as the surprise surge in 4Q16, overall GDP growth for 2016 has turned out to be better than what many had expected (including us).

"Essentially, the growth trajectory of the economy has to be recalibrated and there will be implications to the GDP forecast for 2017 as well.

"As such, we will be revising our GDP growth forecast for 2017, currently at 1.3 per cent, to something close to 3 per cent. Details will be forthcoming later today or Monday."

Kit Wei Zheng, Citibank:

"Still, our GDP upgrade continues to mask a two speed economy. While tech restocking should persist and other externally-oriented services may improve, household debt servicing burdens, corporate sector consolidation and job market slack may remain a drag.

"Indeed, continued risk of bankruptcies in O&M, persistent weakness in retail, F&B, and construction continue to weigh on business sentiment.

"This does not yet factor in significant risks from trade protectionism, which Singapore will be undoubtedly vulnerable, though the precise timing and nature of such measures are hard to predict.

"Targeted support for weak segments in the economy will come from the upcoming Budget on Feb 20, which will be focused on saving jobs via cost cuts, and implementing the CFE recommendations."