The Singapore economy recovered to positive growth in the third quarter of 2003, supported by improvements in both the goods-producing and services-producing industries.

Advance estimates* show that gross domestic product (GDP) in the quarter expanded by 1.0 per cent, in real terms, over the same period in 2002. On an annualised quarter-on-quarter basis, real GDP accelerated by 15 per cent, compared with an 11 per cent contraction in the previous quarter. This is the fastest quarter-on-quarter expansion since the second quarter of 1997.

*The advance GDP estimates for third quarter 2003 were computed largely from the first two months' data (i.e. July and August 2003). They are intended as an early indication of the GDP growth in the quarter, and are subject to revision when more comprehensive data become available.

The resumption to positive growth in the third quarter reflected the gaining strength of the global economy, as well as the recovery from the SARS outbreak in the second quarter.

The manufacturing sector is estimated to have expanded by 2.5 per cent in the third quarter. Increased production of semiconductors and disk drives had supported stronger growth for the electronics cluster, while the switch of product-mix to higher value-added fine chemicals for patented drugs gave a boost to biomedicals output. Performance of the other manufacturing clusters, however, remained weak.

Activity in the construction sector remained lacklustre. The sector is estimated to have contracted by 9.5 per cent in the third quarter.

The services-producing industries are estimated to have grown by 0.8 per cent, mainly on the strength of entrepot trade and financial services. Higher external trade and buoyant sales of motor vehicles underpinned growth in the wholesale and retail trade sector. Increased activity in the stock market, fund management, foreign exchange and ACU segments helped to lift output in the financial services sector.

The other services sectors showed modest improvements. Although visitors from regional markets had picked up, slower growth in international traffic continued to affect the hotels and restaurants as well as the air transport sectors negatively. Lacklustre real estate activity also weighed down output in the business services sector.

The global economic recovery is gaining pace and an upturn in investment spending appears to be in progress. Barring significant adverse developments such as a second outbreak of SARS in Asia, Singapore's economic growth momentum is expected to continue into the final quarter of the year.

The preliminary GDP estimates for the third quarter, including sectoral performances, sources of growth, inflation, employment and productivity, will be released in November 2003 in the Economic Survey of Singapore.

MINISTRY OF TRADE AND INDUSTRY
10 October 2003