Singapore Q3 GDP grew 2.2%, below street estimates; MTI narrows 2018 forecast to 3-3.5%

SINGAPORE’S growth in the third quarter fell short of economist predictions, dragged down by moderating demand for electronics amid uncertain global conditions arising from the US-China trade war.

In the latest data, the Singapore economy grew by 2.2 per cent in the third quarter, below economist expectations of 2.4 per cent and a notch slower than the 2.6 per cent seen in the advanced estimates.

This was also slower than the growth of 4.1 per cent in the previous quarter.

But this was still in line with official expectations, as the Ministry of Trade and Industry (MTI) narrowed its full-year growth forecast upwards to 3-3.5 per cent on Thursday, thanks to a stronger than expected performance in the first half. Earlier estimates had pegged growth to come in within the upper half of the 2.5-3.5 per cent range this year.

With global growth likely to ease in 2019, the MTI expects Singapore’s economic growth next year to ease, coming in at 1.5-3.5 per cent.

On a quarter-on-quarter seasonally-adjusted basis, Singapore's economy grew by 3 per cent, faster than the 1 per cent in the preceding quarter. 

Growth in the quarter was mainly supported by finance & insurance, manufacturing and the business services sectors. 

Manufacturing - a key growth driver since 2017 - grew by only 3.5 per cent in the third quarter, moderating from the 10.7 per cent in the previous quarter. 

Services expanded by 2.4 per cent, easing from the 2.8 per cent growth in the previous quarter. 

Construction continued to contract, declining by 2.3 per cent, but this was a slower pace of decline compared to the previous quarter’s contraction of 4.2 per cent.

For the rest of 2018, Singapore’s economic growth is expected to “moderate but remain firm”.

Looking ahead, the MTI cautioned that the external demand outlook next year is slightly weaker than 2018, while risks in the global economy are tilted to the downside. 

Key risks include further escalation of the ongoing trade conflict, as well as a faster than expected tightening of global financial conditions.