Singapore's economy gained momentum in the fourth quarter of 2023 amid a rebound in the manufacturing sector and continued expansion in construction output.

The economy grew 2.8 per cent year-on-year in the fourth quarter, faster than the 1.0 per cent growth in the preceding quarter, according to advance estimates released by the Ministry of Trade and Industry (MTI) on Tuesday (Jan 2).

On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 1.7 per cent, extending the 1.3 per cent expansion in the previous quarter.

The growth in the fourth quarter was driven by expansions in the manufacturing and construction sectors. The manufacturing sector returned to expansion after three quarters of contraction, according to MTI.

The advance GDP estimates for the fourth quarter are computed largely from data in October and November — the first two months of the quarter.

They are intended as an early indication of GDP growth in the quarter and are subject to revision when more comprehensive data becomes available, said MTI.

For the whole of 2023, the economy grew by 1.2 per cent, moderating from the 3.6 per cent growth in 2022.

SECTOR PERFORMANCES

The manufacturing sector expanded by 3.2 per cent year-on-year in the fourth quarter of 2023, a turnaround from the 4.7 per cent contraction in the previous quarter.

“Growth in the sector was due to output expansions across all clusters, with the exception of the precision engineering cluster,” MTI said.

On a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector grew by 9.0 per cent in the fourth quarter, accelerating from the 0.3 per cent expansion in the third quarter.

Meanwhile, the construction sector grew by 9.1 per cent year-on-year in the fourth quarter, faster than the 6.2 per cent growth in the previous quarter.

Both public and private sector construction output increased during the quarter, MTI said.

On a quarter-on-quarter seasonally-adjusted basis, the pace of growth in the construction sector picked up to 4.3 per cent in the fourth quarter, from 0.8 per cent in the third quarter.

Among the services sectors, the wholesale and retail trade and transportation and storage sectors as a whole grew by 1.5 per cent year-on-year in the fourth quarter, extending the 1.3 per cent growth in the previous quarter.

All sectors within the group recorded expansions.

“Growth in the wholesale and retail trade sector was supported by both wholesale and retail trade activities. Meanwhile, the expansion of the transportation and storage sector was partly driven by the air transport segment, which saw robust growth on the back of the continued recovery in air passengers handled at Changi Airport,” said MTI.

On a quarter-on-quarter seasonally-adjusted basis, the wholesale and retail trade and transportation and storage sectors as a whole shrank by 1.4 per cent in the fourth quarter, a pullback from the 0.6 per cent growth in the preceding quarter.

The group of sectors comprising the information and communications, finance and insurance, as well as professional services sectors grew by 3.9 per cent year-on-year in the fourth quarter, extending the 2.5 per cent growth in the previous quarter.

All sectors within the group expanded during the quarter.

Growth in the information and communications sector was led by the IT and information services segment, while that in the professional services sector was mainly driven by the other professional, scientific and technical services segment, MTI said.

For the finance and insurance sector, growth was primarily supported by activities auxiliary to financial services, which include payment processing activities.

On a quarter-on-quarter seasonally-adjusted basis, the sectors in the group collectively expanded by 2.5 per cent in the fourth quarter, faster than the 1.6 per cent growth in the third quarter.

The remaining group of services sectors — comprising accommodation and food services, real estate, administrative and support services, and other services sectors — grew by 2.0 per cent year-on-year in the fourth quarter, moderating from the 3.9 per cent growth in the previous quarter.

Within the group, the accommodation, real estate and other services sectors recorded expansions during the quarter.

“In particular, the accommodation and other services sectors continued to expand in tandem with the ongoing recovery in tourist arrivals,” said MTI.

On a quarter-on-quarter seasonally-adjusted basis, the sectors in the group collectively contracted by 0.7 per cent in the fourth quarter, a reversal of the 0.7 per cent expansion in the previous quarter.

The preliminary GDP estimates for the fourth quarter and whole of 2023 will be released in the Economic Survey of Singapore in February 2024.

'LESS FAVOURABLE' EXTERNAL ENVIRONMENT AHEAD

In his New Year message for 2024 on Sunday, Prime Minister Lee Hsien Loong said Singapore's economy grew 1.2 per cent in 2023 to avoid a recession.

Mr Lee pointed out challenges ahead as geopolitical uncertainties continue to weigh on the global economy.

2024's gross domestic product has been projected to grow by 1 per cent to 3 per cent, although "much will depend on the external environment", he said.

"For some years to come, we must expect the external environment to be less favourable to our security and prosperity," Mr Lee said.

"In our own region, there are tensions and risks over rival claims in the South China Sea, and because of the cross-Strait situation," he added. "These can affect confidence in the region, and hence our growth."

Mr Lee also said that climate change will also have an impact on the economy.

"Climate change will pose major challenges for every country. We are already feeling its effects," he said.

"Singapore needs to adapt to and prepare for rising temperatures and sea levels, and to transition our economy to net-zero carbon emissions. It will be costly and demanding." CNA

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Source:
courtesy of TODAY

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