Singapore’s economic growth momentum is expected to remain intact in 2011, even as the pace of the gross domestic product (GDP) is expected to slow sharply from last year’s nearly-15 percent.
Economists said the full-year growth for 2010 is likely to be revised up to 15 percent from 14.7 percent. The early estimates in Q4 are based only on data from October and November.
The recovery in Q4 was mainly driven by the growth in pharmaceutical output, said the Ministry of Trade and Industry (MTI).
The services sector also continued to see “healthy” growth in Q4, with good buzz in financial services, especially in the Asian currency unit activity, foreign exchange trading and commercial banking.
Tourism-related services had also been boosted by strong visitor arrivals, said MTI.
However, the construction sector stayed soft due to the decline in private sector building activities.
The flash data are not very far from market expectations, and most 2011 growth forecasts are now in the official projection of 4 percent to 6 percent.
Leong Wai Ho of Barclays Capital expects sequential growth to remain positive – “in the single-digit range” – in the coming quarter even as growth slows to 4 percent year-round.
Unlike in H1 2010 when the sequential pace reached 45 percent and 28 percent, Mr. Leong believes that quarterly growth in 2011 will be more sustainable yet still fairly strong.
Aside from the services sector, other growth drivers would be the expected pick-up in demand for electronics on the back of Sandy Bridge chips’ launch early this year.
The growth in demand for tablet PCs worldwide should also boost demand for components made in Singapore, he said.
However, the trend growth in 2011, together with strong wealth creation, will continue to drive wage price pressures in the country, he added.