19 JUNE 2017: Financial and Economy News
The Monetary Authority of Singapore (MAS) had just released a quarterly report which assesses the near term economic prospects of Singapore. Compared to the previous quarter, the domestic economic activity eased in Q1 2017 ,as Q4 2016 was exceptionally strong. This moderation came as momentum cooled in the financial services and trade-related sectors, and further compounded by a pull-back in the pharmaceuticals and oil trading activity. Growth in the domestic-oriented cluster was resilient, supported by public construction works. The bright spot is in electronics where the recovery in the global technology cycle will continue to buoy regional expansion. Electronics products should see strong demand, in spite of a potential inventory correction in semiconductors in the near term.
Global growth for Q1 2017 was stronger and for the full year, global growth is expected to rise slightly to 4.0%, from 3.9% last year.
Here are other selected observations from the report:
- The construction sector picked up on the back of an increase in public demand for most building types and civil engineering works, following a sluggish performance in H2 2016. The sector grew by 4.3% q-o-q, a step-up from the 0.8% growth in Q4 2016. The improvement in Q1 was supported by an increase in public residential and non-residential building works. Meanwhile private sector construction activities remained in decline.
- The marine & offshore engineering segment continued to contract by declining 3.0% q-o-q, extending the 2.6% fall seen in Q4 2016, as demand for oil & gas exploration capital equipment remained poor.
- The electronics cluster continued to expand, hitching upon the upswing in the global tech cycle. The optimism surrounding the global IT industry also helped the precision engineering cluster—buoyed by stronger demand for semiconductor fabrication equipment, growth of the precision engineering cluster accelerated to 9.2% q-o-q in Q1, from 5.8% previously.
- The accommodation & food services industry contracted by a further 5.2% q-o-q in Q1, after a 7.2% fall in the preceding quarter.
- Overall, the domestic economy is likely to expand at a slightly faster pace compared to 2016, with GDP projected to expand by 1–3% in 2017.
The full report can be found at the website of MAS.
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