Singapore: Revised estimate reveals upgraded GDP growth for Q3
Singapore’s economy grew more than initially expected in Q3, according to new figures released on 24 November, as activity continued to recover from the shackling effects of the coronavirus pandemic. GDP grew 7.1% year-on-year in the third quarter, slowing from the 15.2% expansion seen in Q2, but marking an improvement on the 6.5% growth from October’s advanced estimate. Meanwhile, on a seasonally-adjusted quarter-on-quarter basis, the economy grew 1.3% in Q3, rebounding from the 1.4% contraction recorded in the prior quarter.
The third quarter’s slowdown in annual growth was broad-based, and in no small part driven by a less favorable base effect. Looking at the details of the release, the manufacturing sector grew at a slower pace of 7.2% year-on-year in the quarter (Q2: +17.9% yoy). Meanwhile, growth in the construction sector almost halved, easing to 66.3% in Q3 from the rapid 117.5% expansion recorded in Q2, while services sector growth also moderated in the quarter (Q3: +6.3% yoy; Q2: +10.9% yoy).
Looking ahead, the recovery is set to continue in the final quarter of the year, as the manufacturing industry continues to grow on robust external demand for electronics. However, a surge in Covid-19 cases through October–November may have inhibited activity somewhat. Nevertheless, the Ministry of Trade and Industry (MTI) narrowed its 2021 GDP growth forecast to “around 7.0%”, towards the top of its previous estimate of between 6.0% and 7.0%, due to the strong performance seen across the first three quarters of the year. Looking to 2022, the MTI expects the economy to grow 3.0%–5.0% year-on-year, as a high vaccination rate and the easing of travel restrictions allow activity to continue to recover.
Regarding the outlook, Barnabas Gan, economist at United Overseas Bank, commented:
“For 2022, we keep our growth outlook for Singapore at 3.5% […]. Despite the relative high base data in 2021, Singapore’s economy is expected to stay underpinned by the favourable export and manufacturing sectors. This is especially due to the expected recovery for Singapore’s key trading partners as they bolster their vaccination efforts into 2022. Moreover, the recovery of Singapore’s aviation and tourism-related sectors will continue into the next year, albeit MTI cited that activity is expected to remain below pre-Covid levels throughout 2022. Last but not least, the gradual relaxation of Singapore’s domestic restrictions as the Covid-19 infection rate declines to below 1.0 would further add to the recovery resiliency into the year to come.”