Singapore’s GDP for Q3 up 2.2%, lower than expected; MTI forecast 2018 at 3-3.5%

GDP rose 2.2% in the third quarter on a year-on-year basis, slower than the 2.6% increase in the advanced estimates report a month ago and the 4.1% growth in the second quarter.

Singapore's skyline

Singapore’s economic growth for the third quarter came in below expectations, data from the Ministry of Trade and Industry (MTI) revealed on Thursday. The dip was due to a slowdown seen in the manufacturing sector due to a high base a year ago and weaker demand.

Gross Domestic Product (GDP) rose 2.2% in the third quarter on a year-on-year basis, slower than the 2.6% increase in the advanced estimates report a month ago and the 4.1% growth in the second quarter. Economists were expecting a growth of 2.4%.

On an annualised quarter-on-quarter basis, GDP grew by 3.0%, compared to the 1.0% growth in the previous quarter.

The MTI narrowed the full-year forecast for this year to the upper end of the previous 2.5% to 3.5% range. The growth forecast for this year is expected to be around 3.0% to 3.5%.

For next year, MTI expects growth to come in at around 1.5% to 3.5%, as global growth wanes.

The manufacturing sector expanded by 3.5% for the third quarter, coming down from the high base of a 19.1% growth a year ago and the 10.7% increase in the second quarter. All clusters within the sector expanded, except for the general manufacturing cluster which contracted as output fell for the printing and miscellaneous industries segment.

Services producing industries grew by 2.4% for the third quarter, easing slightly from the 2.8% growth in the previous quarter, as wholesale and retail trade, finance and insurance, and information and communications saw a slight pullback in growth.

The construction sector shrank by 2.3%, in a more gradual pace of decline as compared to the 4.2% contraction in the previous quarter, weighed down by weakness in public sector construction activities.

Singapore’s GDP for second half of 2018 to moderate from first half of the year

In the statement, MTI said GDP growth is expected to slowdown in the second half of this year compared to the earlier part of the year due to slower growth from the United States and China, Singapore’s key trading markets.

For the remaining quarter of this year, Singapore’s growth is expected to “moderate but remain firm,” MTI said. Outward-oriented sectors such as manufacturing plus finance and insurance sectors are expected to continue to expand, albeit at a more moderate pace, and support GDP growth for the rest of the year, it said.

GDP growth in the first three quarters of the year adds up to 3.6% on a year-on-year basis, MTI said.

2019 to see Singapore’s GDP at around 1.5% - 3.5%

For next year, the ongoing trade conflicts between the US and China will see some spill-over effects on the pace of economic expansion for most advanced and regional economies, including Singapore, said MTI.

As the fiscal stimulus implemented on the US starts to fade and monetary policy tightens further, growth in US is expected to moderate. The weaker credit growth and softer external demand will see China soften its growth for next year, albeit support seen from macroeconomic policies issued by the Chinese government.

As the external demand environment next year is seen to be “slightly weaker” than this year, topped with trade conflict risks between the US and its key trading partners and the tightening global financial environment, Singapore is expected to moderate in growth. Weaker demand will affect electronics and precision engineering clusters in the manufacturing sector and trade-facing sectors will also see an ease in pace of growth.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Find out more about