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Singapore's full-year growth slows to 3.2% as fourth quarter misses mark

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Singapore's fourth-quarter economic growth missed estimates in the last stretch of 2018, shaving a fraction off its performance for the full year.

SINGAPORE'S fourth-quarter economic growth missed estimates in the last stretch of 2018, shaving a fraction off its performance for the full year.

Growth came in at 3.2 per cent in 2018, according to the Ministry of Trade and Industry (MTI) on Friday - a sliver under the 3.3 per cent floated by Prime Minister Lee Hsien Loong at the start of the year.

The latest expansion marks a slowdown from 2017, when the economy grew by a revised 3.9 per cent. The figure was adjusted upwards from an initial 3.6 per cent, reflecting a better showing by business services, finance and insurance, and information and communications.

Gross domestic product (GDP) hit S$487.1 billion for the full year in 2018, after expanding by 1.9 per cent year on year in the fourth quarter. It had increased by 2.4 per cent the quarter before.

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The latest fourth-quarter figure was moved downwards from an earlier official estimate of 2.2 per cent, and also missed private economists' slightly more conservative forecast of 2.1 per cent.

External demand rose by 5.2 per cent in 2018 - a notch below the previous year's 5.4 per cent growth - on real merchandise exports such as machinery, transport equipment and chemicals.

Loh Khum Yean, permanent secretary for Trade and Industry, told a morning press conference that "the external demand outlook for Singapore has weakened slightly" since a previous economic briefing for the media in November 2018.

Meanwhile, domestic consumption spending grew by 2.7 per cent in 2018, against 3.4 per cent in 2017, as private consumption growth eased to 2.4 per cent from 3.2 per cent before.

But, asked about whether domestic demand could lag in 2019, Edward Robinson, assistant managing director and chief economist of the Monetary Authority of Singapore's economic policy group, said that the labour market continues to be "very supportive", and private consumption "is expected to maintain a steady pace of growth".

Terence Ho, divisional director for manpower planning and policy at the Manpower Ministry, later said: "If you look at the whole of 2018, of course, the labour market improved on the whole, compared with 2017, but in the fourth quarter there was some mixed impact."

He noted that unemployment ticked up quarter on quarter in the last three months of 2018, and added: "We will have to see and monitor market conditions in the economy as a whole, and whether the uncertainties clear up. It's something that, again, we want to avoid speculating too much, but it’s something that we are watching closely."

The ministry has maintained its growth forecast for 2019, of between 1.5 per cent and 3.5 per cent. It expects growth to be "slightly below the mid-point" of that range, although Maybank Kim Eng's economists went as low as 2.2 per cent in their private-sector forecast.

The MTI noted that "uncertainties and downside risks in the global economy have increased since three months ago", including a sharper-than-expected Chinese slowdown, tensions between the United States and its key trading partners and a possible "no-deal Brexit" in Britain's withdrawal from the European Union.

Given the goings-on in the outside world, the pace of economic growth in the Republic is expected to slow again in 2019, it added. The MTI cited both "a significant moderation in growth" in the manufacturing sector and the slowdown in outward-facing services sectors.