Singapore's economic growth slows down to 4.4% in Q3: MTI advance estimates

SINGAPORE: Singapore's economy grew at a slower pace of 4.4 per cent, but exceeded expectations, in the third quarter of 2022, according to advance estimates released by the Ministry of Trade and Industry (MTI) on Friday (Oct 14).

This compares with a revised figure of 4.5 per cent in the previous quarter.

Economists polled by Reuters had expected a 3.4 per cent expansion for the July to September period from a year ago.

On a quarter-on-quarter seasonally-adjusted basis, Singapore's gross domestic product (GDP) expanded by 1.5 per cent after contracting 0.2 per cent in the second quarter.

Authorities had in August narrowed the official growth forecast for 2022 to a range of 3 per cent to 4 per cent, from 3 per cent to 5 per cent on the back of a weakening external demand outlook.

The advance GDP estimates for the third quarter of 2022 are computed largely from data in July and August. They are intended as an early indication of GDP growth in the quarter and are subject to revision when more comprehensive data becomes available, said MTI.

The preliminary GDP estimates for the third quarter of this year will be released by MTI in November.

CONSTRUCTION SECTOR GROWTH ACCELERATES

The manufacturing sector expanded by 1.5 per cent year-on-year in the third quarter of 2022, slower than the 5.7 per cent growth in the previous quarter. 

Growth during the quarter was supported by output expansions in the transport engineering, general manufacturing and precision engineering clusters, except for the electronics and chemicals clusters.

The construction sector grew by 7.8 per cent year-on-year in the third quarter, accelerating from the 4.8 per cent growth in the preceding quarter.

Both public and private construction output picked up during the third quarter, partly supported by the easing of border restrictions on the migrant workers coming into Singapore.

In absolute terms, the value-added of the construction sector remained 18 per cent below pre-pandemic levels. 

Among the services sectors, the wholesale and retail trade as well as the transportation and storage sectors collectively grew by 6.2 per cent year-on-year in the third quarter. 

All sectors within the group recorded expansion, said MTI. 

Growth in the retail trade and transportation and storage sectors was supported in part by a low base last year as domestic and travel restrictions had an effect on activities in these sectors. 

The group of sectors comprising information and communications, finance and insurance and professional services sectors expanded by 4.0 per cent year-on-year basis in the third quarter. 

All sectors within this group posted growth during the quarter.

The remaining group of services sectors - accommodation and food services, real estate, administrative and support services and other services sectors- grew by 9.2 per cent year-on-year in the third quarter, faster than the 7.6 per cent growth in the previous quarter.

Most sectors within the group expanded during the quarter, as activities in these sectors continued to be supported by the lifting of domestic and border restrictions.

Growth in the food services sector was bolstered by COVID-19 restrictions which had dampened activity in the sector in the third quarter of last year. 

Despite the "strong" GDP report on Friday, ING's senior economist Nicholas Mapa said he expects Singapore's growth to slow down in the fourth quarter, with signs pointing to even faster inflation coupled with global trade softening on recession fears.

Echoing that, OCBC's chief economist Selena Ling said the growth prognosis is for “below trend growth” in 2023.

"Notably, the mention of the drag on economic activity from the globally synchronised tightening in monetary policy will intensify, and growth in our major trading partners will slow to below trend but stay positive, suggests that prospects for Singapore’s manufacturing and some trade-related sectors have dimmed," she wrote in an analysis.

The mitigating factors, she added, are continued resiliency in domestic-oriented and travel-related sectors, underpinned by strong household balance sheets and a tight domestic labour market which should see sustained wage growth.