Q413 Performance Unlikely To Portend Protracted Slowdown
BMI View: Singapore's economy endured a quarterly contraction of 2.7% (quarter-on quarter, seasonally adjusted annualised rate [q-o-q SAAR]) in Q413, disappointing consensus estimates of a milder 1.3% decline. Still, real GDP growth for the entire year came in at a healthy 3.7%, just beating our forecast of 3.6% on the back of a strong performance from the services sector, and we do not believe that Q413's slowdown is indicative of a more protracted deceleration. With external conditions in 2014 likely to be slightly more friendly towards the city-state's beleaguered export sector, we retain our forecast for real GDP growth of 3.2% this year.
Singapore's real GDP growth slowed in Q413, with initial estimates of a 4.4% year-on-year (y-o-y) and -2.7% quarter-on-quarter, seasonally adjusted, annualised (q-o-q SAAR) performance failing to meet consensus expectations of 4.8% and -1.3%, respectively. The largest drag in q-o-q terms came from the construction sector, where activity shrank by 6.9% q-o-q SAAR versus a positive growth rate of 1.7% in Q313. Meanwhile, the previously buoyant services sector also lost steam, posting a 1.7% q-o-q SAAR contraction versus a 3.0% expansion in Q313.
However, as has long been the case with Singapore's economic activity figures, high levels of volatility from quarter to quarter are the norm rather than the exception, and we therefore do not view the most recent data as cause for concern over a more protracted slowdown. For instance, despite the fact that manufacturing activity contracted by 4.0% q-o-q SAAR (following a 1.2% expansion in Q313), much of this can be attributed to a retrenchment in the extremely volatile (and heavily cyclical) biomedical sector, suggesting that the slowdown will have little bearing on activity going forward.
|Annual Figures Point To Stabilisation|
|Singapore - Real GDP, % chg q-o-q SAAR & y-o-y|