Services, with a smile, offer higher growth

Economists bet on this sector and Q2 rebound to raise growth forecast to 2.self storage9%[SINGAPORE] Economists may have turned more optimistic about Singapore's growth for 2013, but their rosier outlook is hinged more on the second quarter's stronger-than-expected showing than on hopes for a major improvement in the second half of this year.In fact, economists that BT spoke to say that they are cautious about Singapore's economic outlook - particularly in the manufacturing sector - citing regional emerging market risks that could hit exports hard.Thus, they expect this year's expansion to be led by the services industry, with the manufacturing sector turning from the economy's key driver to the main drag on growth.Professional forecasters, polled by the Monetary Authority of Singapore from mid-August, now expect the economy to grow at a faster pace. The 19 private sector economists and analysts who responded to the central bank's survey expect GDP to grow 2.9 per cent in 2013 - up from the 2.3 per cent median forecast in June's poll.But the economists qualify that the more sanguine figure - which sits within the lower half of the government's full-year growth forecast range of 2.5-3.5 per cent - comes from a low base in 2012, and owes a debt to Q2 2013's unexpectedly strong performance."A lot of this was based on front-loaded momentum," said Barclays' Joey Chew, while Irvin Seah of DBS told BT: "I think the Q2 rebound has lifted the overall growth trajectory for the full year, and that explains this upward revision in 2013's growth forecast."The Singapore economy expanded by 3.8 per cent in Q2 - surpassing the median forecast of 1.5 per cent reported in the June survey.For Q3 2013, the respondents expect GDP to expand by 4 per cent year on year - higher than 3.5 per cent in the earlier poll.But economists point out that the 2.9 per cent consensus forecast for 2013 implies that a pull- back in sequential terms is probable, with a quarter-on-quarter contraction likely to occur in Q3."Despite the headline figures that read an upgrade to Q3 and迷你倉2013's growth forecasts, the underlying truth is somewhat less glossy," said Mizuho economist Vishnu Varathan, who stressed that regional emerging market risks remain on the horizon, which could have a "huge knock- off impact on Singapore's economy".Ms Chew agreed that "the reason for caution is probably from the exports side of things . . . with some jitters about Indonesia and Malaysia".Prospects for the manufacturing sector have deteriorated, with the industry now expected to grow just 0.2 per cent this year, down from 1.2 per cent in the last survey.Forecasters also expect non-oil domestic exports (NODX) to contract 0.5 per cent, compared to growth of 2.5 per cent in the previous poll.Sluggish domestic exports had last month prompted a downgrade in Singapore's official full year NODX growth forecast to 0-1 per cent, from an earlier 2-4 per cent.The forecasters' upgrade for 2013 was led by cheerier outlooks for the services industry, and in particular, for those from the finance & insurance and wholesale & retail trade sectors.The former is now expected to grow 10.6 per cent, up from 6.1 per cent in the previous survey. The latter is expected to grow 3.5 per cent, up from 0.9 per cent in June's poll.Still, Ms Chew and Mr Varathan believe that financial services could be more subdued in the second half of this year, because of market volatility or new loan curbs introduced to encourage financial prudence.Nevertheless, economists agree that 2013's growth will be driven by the services sector - which now accounts for almost two thirds of Singapore's GDP."This time around - and in contrast to usual years - the manufacturing outlook has actually been downgraded, whereas the growth forecast has been upgraded . . . It really gives us some clues as to how growth is being looked at now," said Mr Varathan.DBS's Mr Seah agreed: "The services sector has a tremendous impact on the entire economy . . . Don't expect a strong surge (in services growth), but it should continue to grind steadily northwards. And this will lift overall GDP growth."文件倉