SINGAPORE: A strong showing by the manufacturing sector helped Singapore’s economy to grow 4.6 per cent year-on-year in the third quarter from a year ago, advance estimates from the Ministry of Trade and Industry (MTI) showed on Friday (Oct 13).
This is the strongest pace since the first quarter of 2014, and comes in higher than the year-on-year growth of 2.9 per cent in the second quarter. It also beat the median forecast of 3.8 per cent in a Reuters poll.
On a quarter-on-quarter seasonally adjusted annualised basis, gross domestic product (GDP) grew 6.3 per cent during the July to September period, beating expectations of 3.2 per cent in the Reuters survey.
The latest growth figures also marked an improvement from the 2.4 per cent growth in the previous quarter.
The manufacturing sector remained the brightest spot in the economy, with an expansion of 15.5 per cent on a year-on-year basis in the third quarter, faster than the previous quarter's 8.2 per cent growth. Growth was supported mainly by robust expansions in the electronics, biomedical manufacturing and precision engineering clusters.
On a quarter-on-quarter seasonally adjusted annualised basis, the sector grew at a faster pace of 23.1 per cent, compared to the 3.2 per cent growth in the preceding quarter.
The services producing industries grew by 2.6 per cent on a year-on-year basis in the third quarter, similar to the 2.5 per cent growth in the previous quarter. Growth was largely supported by the finance and insurance, wholesale and retail trade, and transportation and storage sectors.
On a seasonally adjusted annualised basis, it expanded by 1.5 per cent quarter-on-quarter, moderating from the 3.3 per cent growth in the preceding quarter.
The construction sector continued to suffer. It contracted by 6.3 per cent on a year-on-year basis in the third quarter, extending the 6.8 per cent decline in the previous quarter, weighed down primarily by continued weakness in private sector construction activities.
From the previous three months, the sector contracted by 9.2 per cent, a reversal from the 2.4 per cent growth in the preceding quarter.
MANUFACTURING GROWTH COULD LOSE STEAM: ANALYSTS
Given the stellar run since the fourth quarter of 2016, economists generally agreed that the outperformance of the manufacturing sector will likely lose its steam soon.
“It is doing a 100m sprint in a 2.4km race and that’s not sustainable,” Mizuho Bank's senior economist Vishnu Varathan told Channel NewsAsia.
Despite lingering concerns of uneven growth, economists take comfort at hints of broadening growth drivers in the services industry, which accounts for more than two-thirds of the Singapore economy.
“The main story behind the GDP numbers is that recovery is broadening out. This can be seen from the turnaround in the services sector,” said DBS economists. “Most key services segments are back in expansion mode. And higher frequency data such as re-exports, container throughput and financial market turnovers are all trending higher.”
Still, third-quarter GDP could be the strongest set of growth data for Singapore this year.
With the economy shifting from recovery to a normalisation phase, and major central banks around the world embarking on gradual policy tightening, Singapore's economic growth "could ease a tad in the coming quarters", according to DBS.
MTI will release GDP figures for the third quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in November.
In August, the Government narrowed the full-year growth forecast for the Singapore economy to 2 to 3 per cent, from the earlier range of 1 to 3 per cent.