GDP growth forecast to register a mere 1.8%

Analyst says 2013 will not be great either.

DBS Group Research noted:

The services sector is unlikely to do well either. Growth in this sector is expected to be lowered to 0.9%, from 1.2% shown in the advance estimate. Trading volume in the equity market has been lacklustre while loan growth has been trending lower. These affect the key financial services industry.

Moreover, externally driven industries such as the wholesale trade and the transport services are still depressed by the global doldrum while other labour intensive segments are bearing the brunt of the government’s tightening in foreign labour policy. Growth in the services sector has been easing for the last 8 quarters and things are unlikely to turn around anytime soon given the current economic conditions.

With another disappointing quarter, overall full year GDP growth is expected register a mere 1.8%. Next year will not be great either with a 3.2% growth penciled into our forecast. Indeed, Singapore has significantly underperformed its regional peers in this regards.

It’s easy to point to the weak external demand but to some extent, the economy is weighed down by the pains from the ongoing restructuring process. As long as the tightening measures from the restructuring process remain in place, Singapore’s growth will remain below potential while inflation will stay above historical norms.