Economists positive about economic growth due to manufacturing boost
Private economists are now far more upbeat about the Singapore economy's outlook this year than they were just three months ago.
A resurgent manufacturing sector will be the key growth driver after a recent bullish showing but construction will struggle, they say.
The local economy is expected to expand 2.3 per cent this year, according to the latest quarterly survey of economists by the Monetary Authority of Singapore (MAS).
That is a healthier rate than the 1.5 per cent median forecast last December.
The 23 economists responding to the latest survey see manufacturing powering ahead by 4.5 per cent this year, far more optimistic than their December 1.1 per cent estimate.
One of those surveyed, DBS senior economist Irvin Seah, tips a strong 2.8 per cent full-year growth.
"We are seeing strength in the US recovery and stabilisation in the Chinese economy," he told The Straits Times.
"This has manifested in the significantly stronger manufacturing performance, particularly in the electronics cluster."
We are seeing strength in the United States recovery and stabilisation in the Chinese economy...particularly in the electronics cluster. DBS senior economist Irvin Seah
In January, total non-oil domestic exports surged 8.6 per cent, backing up two previous months of growth. Electronics exports rose by 6.1 per cent, accelerating from December's 5.7 per cent.
Export momentum is set to continue, with the latest MAS survey showing a median forecast of 6.1 per cent growth - well above the 0.3 per cent previous estimate.
Global trade has been a key focus in recent months amid worries that US President Donald Trump will lock horns with China over trade. But Mr Seah said this is "rhetoric" that is unlikely to become reality.
Some manufacturers, such as precision engineering firm Fong's Engineering, are cautiously optimistic.
"I'm still concerned about the uncertainties around what Trump will do, about China's slowdown. But we expect sales to grow by 20 per cent to 30 per cent this year," its managing director Jeremy Fong said.
Construction is set to be the worst performer, with growth of 0.3 per cent tipped for this year.
"Manpower constraints remain a major challenge for construction companies," United Overseas Bank economist Francis Tan said.
The Manpower Ministry expects some lift to employment growth after last year's rise of just 8,600 jobs, but only at a moderate pace.
"Over the next three to five years, total workforce growth is expected to be in the range of 25,000 to 40,000, significantly lower than in previous years up to 2014," it said in its 2016 review report released yesterday.