Singapore Q4 GDP beats forecasts as manufacturing rebounds

Singapore's economy posted surprisingly strong growth in the fourth quarter, although the outlook is clouded by worries over a slowdown in China and uncertainty over rising global trade protectionism under the incoming Trump Administration.
Gross domestic product (GDP) expanded 9.1 percent in the October-December period from the previous three months on an annualised and seasonally adjusted basis, the Ministry of Trade and Industry said on Tuesday.

That came after GDP contracted a revised 1.9 percent in the third quarter. The median forecast in a Reuters poll was for growth of 3.7 percent.

The economy grew 1.8 percent for the full year, exceeding the government's previous forecast of 1.0-1.5 percent growth, but still the lowest growth since 2009.

"It's good, but...at 1.8 percent for full year, this is still very weak growth," said Edward Lee, an economist for Standard Chartered Bank in Singapore.

While a recent pick-up in exports has been helped by shipments to China, the outlook is uncertain, Lee said.

"Considering China, where it is now...it's hard to call for a recovery in Singapore. At best we're seeing a stabilisation at a weak level," Lee said, adding that he expects Singapore's economic growth to slow in 2017 compared with 2016.

The Singapore dollar edged up slightly to an intraday high of 1.4489 per U.S. dollar after the stronger-than-expected GDP data. It was last steady at 1.4505 per dollar, having set a 7-year low of 1.4538 in late December.

The manufacturing sector grew 14.6 percent from the previous quarter on an annualised basis, bouncing back from the third quarter's 8.1 percent contraction, while the services sector expanded 9.4 percent in the fourth quarter.

Singapore's economy has been on the ropes in the last two years as exports fell away amid slow global growth and a slowdown in China. Analysts remain cautious about the outlook due to rising concerns over incoming U.S. President Donald Trump's stance on trade.

Trump has pledged to redraw trade deals to win back American jobs, and has vowed to pull the United States out of the Trans-Pacific Partnership, a free-trade pact aimed at linking a dozen Pacific Rim nations.

While most analysts expect Singapore's central bank to keep policy unchanged at its next policy review in April 2017, some expect the central bank to ease, due to a tepid growth outlook for the city-state's economy.