Singapore GDP Growth to Slow in Q3

Singapore’s economic growth is expected to have lost momentum in the third quarter, as the manufacturing sector struggled from lower demand worldwide and a deepening China-US trade war.

A poll of 11 economists conducted by a UK news agency showed the government’s final gross domestic product (GDP) was estimated to climb 4.2 percent in the three months ending September from the previous quarter on a seasonally adjusted and annualized basis.

Final third quarter GDP is expected to be revised downwards, given the slower than expected manufacturing numbers and monthly indicators for the services sectors such as bank loans and property sales showing weaker numbers, according to economist Lee Ju Ye.

On a yearly basis, GDP was forecast to expand 2.4 percent in the quarter, just shy of the 2.6 percent increase forecast and below the 4.1 percent rise recorded in the second quarter. That would mark the second consecutive quarter of softer annual growth.

Trade Tensions Hit Singapore’s Manufacturing Sector 

While Singapore’s economy expanded strongly this year and kept on growing at a reasonable rate through the first half of the year, the city-state have begun facing strains in recent months.

The Monetary Authority of Singapore (MAS) has cautioned that an intensifying trade dispute between the US and China, one of the city-state’s major trade partners, could harm the domestic economy.

Export growth to China has slowed for 5 straight months, further adding to concerns over outlook as the possibility of the China-US trade tensions subsiding seems unlikely.

Steve Cochrane, chief Asia Pacific economist of a US analytics firm, stated that they see more slowing throughout 2019 and that the softening reflects cooling global growth.

The Ministry of Trade and Industry expects full-year expansion at 2.5 to 3.5 percent in 2018.

Manufacturing and exports of electronics mainly contributed to Singapore’s expansion in 2017, helping GDP grow to its fastest pace in three years.

However, year-on-year exports of electronics have declined this year by 5.5 percent, while manufacturing activity surprisingly weakened for the third consecutive month in September as it fell 4.9 percent on a seasonally adjusted month-on-month basis.

There has been a shift in the pattern of exports this year. It used to be focused on electronics but now it has shifted to the non-electronics sector like pharmaceuticals, Cochrane said.

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