Singapore’s economy fared better than initially thought in the third quarter as the government forecasts that growth may quicken next year, adding to signs that recovery is well on track and that a recession is unlikely.
Gross domestic product in the three months through September grew 1.4% from the previous quarter, the Ministry of Trade and Industry said in its final estimate Wednesday. That compares with a preliminary reading of a 1% expansion and a 0.1% gain in the second quarter.
The economy increased 1.1% in the third quarter from a year ago, compared with an earlier estimate of 0.7% gain and 0.5% growth in the April-June period, according to the trade ministry.
GDP growth in the first three quarters of the year stood at 0.7%, prompting the government to adjust its outlook for the full-year print to around 1% from the 0.5%-1.5% prior forecast, the MTI said in a statement. Economic expansion may accelerate further to an estimated 1%-3% in 2024.
While risks abound arising from elevated borrowing costs globally, volatile energy prices due to the Middle East conflict and China’s uneven recovery, the city-state offered a sanguine outlook. The country’s tourism sector is expected to remain robust while manufacturing and trade are seen to improve with the turnaround in global electronics demand.
The travel rebound is seen to continue spurring expansion in aviation and tourism, while resilient labour market conditions should support the retail and food and beverage sectors, the government said.
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The finance and insurance sectors should see a modest recovery in 2024 if global interest rates start to decline, according to the MTI.
The Singapore dollar was steady against the greenback at 1.3380, as the local dollar saw little reaction to the Singapore GDP beat.
The Monetary Authority of Singapore’s current policy stance is appropriate as it stated in October, according to the central bank’s deputy managing director and chief economist Edward Robinson at a joint press briefing with MTI on Wednesday.
The MAS maintained inflation forecasts this year and next although it flagged some near-term volatility. Even before the Israel-Hamas war, gas and electricity prices were due to rise this quarter in Singapore and water rates are set to increase in April.
Core inflation, the key price gauge in Singapore which has cooled to an 18-month low in September, may have slightly quickened last month, according to a median estimate in a Bloomberg survey ahead of the Nov. 23 data. Exports fell for a 13th straight month in October, although the contraction has eased.
Manufacturing and trade will likely remain weak for the rest of 2023, then recover next year with the turnaround in global electronics demand and improving growth prospects in the US and the Eurozone, according to the MTI.
More details from the third-quarter final GDP print:
Manufacturing declined 4.6% year-on-year, after 7.6% drop in the previous quarter
Construction grew 6.3% from a year ago, after a jump of 7.7% in the second quarter
Services-producing industries rose 2.3% on-year, compared to 2.8% gain in the previous three months
