Singapore's economic growth rebounded in the fourth quarter, helping the trade-reliant city state avoid a technical recession, but economists and analysts warned the outlook for 2017 will remain grim.
The export driven economy, which was spooked by the protectionist policies of incoming US president Donald Trump, recorded a faster than expected annual growth rate of 1.8 percent, data released by the Ministry of Trade and Industry (MTI) on Tuesday showed.
The economy had expanded 2 percent in 2015. Singapore's economy had contracted 1.9 percent in the July to September period.
"Singapore dodges a technical recession comfortably in Q4 but we expect the Singapore economy to remain in 'slow-mo' (slow motion). Specifically, we do not expect the Singapore growth outlook to improve materially in 2017. We expect GDP growth to ease from 1.8 per cent in 2016 to 1.4 per cent for the whole of 2017," ANZ economist Ng Weiwen told the Business Times.
While the growth in the fourth quarter helped avoid a technical recession, which is defined as two straight quarters of declines in economic output, this was the slowest pace at which the economy grew since 2009.
A sharp rebound in manufacturing and services helped the gross domestic product to expand 9.1 percent quarter on quarter in the fourth quarter, pushing the annual growth above the government's forecast of a maximum of 1.5 percent for the year.
Manufacturing, which makes up of about 20 percent of the economy, grew 6.5 percent on a year-on-year basis, higher than the 1.7 percent growth in the previous quarter. The expansion was driven by the electronics and biomedical manufacturing sectors MTI said. However, transport engineering and general manufacturing clusters continued to decline, the report said.
Meanwhile, services that contribute to two-thirds of the economy recorded marginal improvement in growth at 0.6 percent. The construction sector saw a contraction of 2.8 percent year-on-year.
Singapore's export-led economy had been pressured by the global downturn for more than a year, with the city state' dominant oil and gas sector suffering long-term setback due to the continued slump in oil prices.
"Overall, we are not doing badly, considering the global economic uncertainties ... While the labor market has eased, unemployment remains low and we are still creating new jobs," Prime Minister Lee Hsien Loong said in his New Year message.