Singapore’s economy grows more than expected, suggesting recovery well on track

The tourism sector is expected to remain robust while manufacturing and trade are seen to improve with the turnaround in global electronics demand
Aviation is also seen expanding, the government said, adding that resilient market conditions should support the retail and food-and-drink sectors

Singapore

Bloomberg

Published: 2:02pm, 22 Nov 2023

Why you can trust SCMP

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 per cent from the previous quarter, the Ministry of Trade and Industry said in its final estimate on Wednesday. That compares with a preliminary reading of a 1 per cent expansion and a 0.1 per cent gain in the second quarter.

The economy increased 1.1 per cent in the third quarter from a year ago, compared with an earlier estimate of 0.7 per cent gain and 0.5 per cent growth in the April-June period, according to the trade ministry.

The Monetary Authority of Singapore, the city state’s central bank, has maintained inflation forecasts this year and said on Wednesday that its current policy stance is appropriate. Photo: Reuters

GDP growth in the first three quarters of the year stood at 0.7 per cent, prompting the government to adjust its outlook for the full-year print to around 1 per cent from the 0.5 per cent-1.5 per cent prior forecast, the ministry said in a statement. Economic expansion may accelerate further to an estimated 1 per cent-3 per cent in 2024.

While risks abound arising from elevated borrowing costs globally, volatile energy prices due to the Israel-Gaza war 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-drink sectors, the government said.

The finance and insurance sectors should see a modest recovery in 2024 if global interest rates start to decline, according to the ministry.

The Singapore dollar was steady against the US dollar at 1.3380 on Wednesday.

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 the trade ministry on Wednesday.

The central bank maintained inflation forecasts this year and next although it flagged some near-term volatility. Even before the Israel-Gaza war, gas and electricity prices were due to rise this quarter in Singapore and water rates are set to increase in April.

People watch a laser light show in Marina Bay in 2018. Electricity prices were due to rise in Singapore even before the outbreak of war in the Middle East. Photo: Getty Images

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 November 23 data.

Exports fell for a 13th straight month in October, although the contraction has eased.

Manufacturing and trade is likely to remain weak for the rest of the 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 trade ministry.

Post