Singapore's economy surprised many industry watchers after it ended the year with a better than expected 3.5 percent growth. However, economists at BMI Research are predicting a slight moderation in the country's economic performance as export demand slows.
In a research paper, BMI Research economists said Singapore's real gross domestic product growth for 2018 would slow down to 3 percent as export cools and the construction sector continues to exert weak output.
"We expect to see exports expand at a slower rate due to the wearing off of favourable base effects and the softening of the global tech cycle," the economists said.
Meanwhile, the construction industry's outlook is also likely to remain weak and would act as a drag on the overall economy.
"Although, the government's measures and rising house prices will lend a degree of support," the economists said.
The ongoing labour restructuring process and the bleak property market are said to be the main drags of the construction sector. BMI economists are not so optimistic about the sector, expecting it to post the same pace of growth as in 2017. This would reflect the weakening investor sentiment in both residential and non-residential building sectors.
Official figures revealed that the sector was stuck in the doldrums during the past quarters. In Q417, the construction output slumped by 8.5 percent, extending the previous quarter's 7.7 percent negative growth.
"With Singapore's property market only showing incipient signs of recovering, we believe that the construction industry is unlikely to see a significant pick up over the coming quarters, with property price growth expanding by 0.7 percent quarter-on-quarter in both Q417 and Q317," the economist expounded.
While export demand is expected to ease slightly, the Singapore economy would continue to see strength in its manufacturing sector.
To recall, the sector expanded by 6.2 percent in the last quarter of 2017 due to the strong demand registered from the electronics and precision engineering clusters.
BMI economists said Singapore's sound economic fundamentals and positive business environment are likely to provide support for the city-state over the coming quarters.