Singapore: Annual GDP growth revised down in the third quarter
November 23, 2018
A comprehensive estimate by the Ministry of Trade and Industry (MTI) released on 23 November revealed GDP growth was much weaker than previously estimated. GDP grew a subdued 2.1% over the same quarter a year ago in the third quarter (previously reported: +2.6% year-on-year), marking a two-year low. The print was also a notable deceleration from the 4.1% expansion logged in Q2 and undershot market expectations of 2.4% growth. In quarter-on-quarter seasonally-adjusted terms, growth was a downwardly revised 3.0% (previously reported: +4.7% SAAR), up from the revised 1.0% reading in Q2 (previously reported: +1.2% SAAR).
The downward revision to annual growth was due to a softer expansion in manufacturing than previously estimated and slower growth in the services sector. Manufacturing growth moderated to 3.5% in the quarter (Q3 previously reported: +4.5% yoy; Q2: +10.7% yoy), weighed on by softer demand for electronics and precision engineering. Meanwhile, growth in services was also revised down from the preliminary estimate to 2.4% (Q3 previously reported: +2.9% yoy; Q2: +2.8% yoy) on weaker growth in the wholesale and retail trade, information and communications, and finance and insurance clusters. The construction sector continued to contract in Q3, albeit at a softer pace than in Q2 on sluggish activity in the public sector (Q3: -2.3% yoy; Q2: -4.2% yoy).
Momentum will likely continue to wane in the final quarter of 2018 and into next year as the open economy faces multiple headwinds including easing growth in the manufacturing sector, weighed on by the ongoing U.S.-China trade spat, a maturing tech cycle, and cooling global growth. Nevertheless, the economy is expected to remain resilient, despite less favorable dynamics. A healthy labor market should fuel domestic demand, export-oriented sectors will likely continue to drive growth, while the MTI expects the construction sector to rebound in 2019.