SINGAPORE (Feb 15): Singapore's economy grew at its slowest pace in more than two years in the fourth quarter, data showed on Friday, and the city-state's trade ministry warned that manufacturing is likely to face significant moderation this year.
Weakening growth momentum for Singapore's open economy -- a high-tech manufacturing base and transportation hub -- underscores the risks to Asia's export economies from a slowdown in China and Beijing's trade war with Washington.
Singapore's growth pace is expected to slow in 2019 as manufacturing "is likely to see a significant moderation," trade ministry official Loh Khum Yean said, adding that the important electronics and semiconductor sector were particularly vulnerable.
Loh said services -- which account for roughly 70% of the economy -- are also likely to ease.
From a year earlier, gross domestic product grew 1.9% in the fourth quarter, less than the 2.2% advance estimate from the Ministry of Trade and Industry (MTI) and the 2.1% rise seen in the Reuters poll.
That was the slowest on-year pace since the third quarter of 2016, when it grew 1.2%.
In October-December, the economy grew 1.4% from the previous three months on an annualised and seasonally adjusted basis, lower than the ministry's initial estimate, made on Jan 2, of 1.6%. The Reuters poll expected no revision of the initial quarterly number.
The economy grew 3.2% for all of 2018, the ministry said, compared with its 3.3% advance estimate.
It kept Singapore's 2019 GDP growth forecast at between 1.5 and 3.5%, but added that growth would likely be slightly below the range's mid-point.
"Singapore is still a heavily export reliant economy," said Barnabas Gan of UOB bank. "The weaker external environment outlook we are seeing right now, and the semiconductor slowdown, could inject further downside risk to our 2.5% outlook."
FALLING EXPORTS TO CHINA
Taiwan, another key Asian exporter, on Wednesday trimmed its 2019 economic growth forecast because of weaker global demand for its semiconductors and tech gadgets.
Prospects for trade this year depend heavily on resolution or a lessening of the disputes between the United States and China. US tariffs on US$200 billion ($272 billion) worth of imports from China are scheduled to rise to 25% from 10% if the two sides do not reach a deal by March 1, increasing pressure and costs in sectors from consumer electronics to agriculture.
For the whole of 2018, Singapore's non-oil domestic exports expanded 4.2%. Significantly, there was an 8.8% drop in non-oil domestic exports to Singapore's biggest trade partner, China, compared with a 31.1% rise in 2017.
Trade ministry officials mainly put it down to a distortion caused by a high reading the previous year, but some analysts said it could be one of the first signs of an impact from the trade war.
The city-state's trade agency is expecting total export growth this year of zero to 2.0%.
