The weak construction sector is expected to drag Singapore’s real GDP growth at a slower pace of three percent in 2018 from last year’s 3.5 percent, reported Singapore Business Review citing BMI Research.
The construction industry is forecasted to grow 2.4 percent in real terms this year, the same pace seen in 2017, mirroring weak investor sentiment within the residential and non-residential building sectors.
And with the property market showing incipient signs of recovering, BMI Research believes the construction industry will unlikely witness a significant pick up in the coming quarters.
“The government’s ongoing labour restructuring process and the still-weak property market continue to weigh on the construction sector and we expect the outlook to remain anaemic.”
With this, the government plans to use S$1.4 billion to support the local construction industry, said the thinktank. However, BMI Research expects the impact to be limited as construction companies continue to struggle with labour shortages and slower demand.
Nonetheless, Singapore’s positive business environment and sound economic fundamentals are expected to provide support for the city-state in the coming quarters.
BMI Research revealed that Singapore has a robust external position, with a net international investment position of around 250 percent of GDP as well as a considerable current account surplus of around 20.0 percent of GDP in 2016.
“In addition, Singapore’s operational risk environment remains sound, coming in at 82.2 (out of 100) compared to the regional average of 53.6 and we expect ongoing efforts to strengthen the already positive business environment to ensure that the republic remains an attractive investment destination over the coming years,” it said.
“This was reflected in Singapore’s retention of its second-place ranking in the World Bank’s 2018 Ease of Doing Business report, boding well for the country’s economic outlook.”
This article was edited by Keshia Faculin.