Singapore exceeded estimates for economic growth in the third quarter with the city-state’s authorities claiming that a full recovery will be secured next year.
GDP grew by an annualised 2.1 per cent in the third quarter from the second quarter, after an earlier projection of 0.6 per cent, the Ministry of Trade and Industry (MTI) reported.
Singapore, like other trade-reliant economies, has been affected by Donald Trump’s ongoing trade war with China and a wider global slowdown, cutting annual growth forecasts twice during 2019.
The Lion City’s manufacturing sector, which has taken a hit this year, recorded its first rise in five months in September because of a steep increase in pharmaceutical orders.
The economy is set to expand by 0.5-2.5 per cent in 2010, compared with 0.5-1 per cent this year, the ministry forecast.
“Given the growth outlook for Singapore’s key final demand markets and the projected recovery in the global electronics cycle in the year ahead, MTI expects growth in the Singapore economy to pick up modestly in 2020 as compared to 2019,” the ministry announced.
Enterprise Singapore said the International Monetary Fund expected global growth to pick up modestly to 3.4 per cent in 2020. But it added that “downside risks, such as trade tensions, no-deal Brexit withdrawal and deterioration in financial market sentiments could impact economic growth”.
Shipments of non-electronic goods fell 3.9 per cent over the year in the third quarter, after a 10.6-per-cent drop in the second quarter. The biggest contributions came from pharmaceuticals, petrochemicals and primary chemicals.
“There are signs of stabilisation in the global economy even though global growth remains weak,” said, Gabriel Lim, the permanent secretary at the ministry.
Singapore’s electronics sector has experienced a minor rebound although exports are still contracting.
“Prospects for 2020 tilt toward stabilisation,” said Selena Ling of the Oversea-Chinese Banking Corporation in Singapore. Non-oil exports were expected to recover “if there is no further escalation of US-China trade tensions in the form of fresh tariffs/hikes”, Ling added.
Singapore’s central bank, the Monetary Authority of Singapore, has also eased monetary policy for the first time since 2016.
Edward Robinson, chief economist at the institution, said policy was “assessed to remain appropriate at this point in time [and the] policy stance then will depend on how the economy evolves”.
Manufacturing has recovered from a recession to grow an annualised 7.6 per cent during Q3 from Q2 while the construction sector contracted by 0.1 per cent.
The US-China trade war looms over many Singaporean businesses. Picture credit: Wikimedia