- The Straits Times
Singapore is expected to report slower third-quarter economic growth than initially thought, a Reuters poll showed, as the manufacturing sector faces strains from weaker global demand and an intensifying trade dispute between the United States and China.
The government’s finalised gross domestic product (GDP) was forecast to rise 4.2 per cent in July-September from the quarter earlier on a seasonally adjusted and annualized basis, the poll of 11 economists showed, below the 4.7 per cent rise seen in the advanced estimate but still much stronger that the 1.2 per cent growth clocked in the second quarter.
“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,” said Maybank Kim Eng Securities economist Lee Ju Ye.
On a year-on-year basis, third quarter GDP growth was forecast at 2.4 per cent, slightly below the 2.6 per cent advanced estimates and lower than the second quarter’s 4.1 per cent rise. It also marked the third successive quarter of softer annual growth.
While the city-state’s economy grew strongly in 2018 and continued to motor at a reasonable pace through the first half of the year, stresses have started to emerge in recent months.
Singapore’s central bank has warned that a heated trade war between the United States and China – one of the city state’s major trade partner – could hurt the domestic economy.
Export growth to China has slowed for 5 months in a row, raising worries about the outlook as the Sino-US trade tensions showed no signs of abating.
“We see more slowing throughout 2019,” Steve Cochrane, Moody’s Chief Asia Pacific economist said, adding that the softening reflects cooling global growth.
The Ministry of Trade and Industry had forecast full-year growth of 2.5 to 3.5 per cent in 2018. Manufacturing and exports of electronics were one of Singapore’s main drivers of growth last year, which saw GDP grow at its fastest pace in three years.
But year-on-year exports of electronics has been contracting this year while factory production unexpectedly declined in September.
“There’s 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.