Chart of the Day: Here’s proof that modern services is the main growth pillar for Singapore

Could it sustain its growth under duress?

Prolonged external demand weakness has spread across more sectors in Singapore, threatening modern services, the city-state’s primary growth pillar.

According to a report by Citi, 38% of 58 industry segments experienced negative growth in 2015, a rise from 24% the previous year.

Citi said the decline was most prominent with the modern services sector, as falling credit demand and lower income from fund management generated a pullback in financial sector activity.

“Despite a 2.6% QoQ SA increase in manufacturing output in 1Q following six months of contraction, this was attributed to a temporary rise in production in the volatile Pharmaceutical sector in January, with the average sequential contraction of re-export volumes in Jan-Feb 2016 indicating continued dampened external demand,” Citi said.

Meanwhile, Citi added that support is expected from growth in domestically oriented sectors stemming from the continued demand of education, healthcare services and government spending on infrastructure, notwithstanding a softer outlook for the retail and real estate segments alongside weakening economic sentiment.