Singapore economic growth deteriorates more than market expectations in Q3

The gross domestic product of Singapore deteriorated more than what markets had initially anticipated during the third quarter of this year.

Singapore’s GDP fell by 4.1 percent q/q on a seasonally adjusted annual rate in the third quarter, far more sharply than anticipated. (DBS had expected a modest drop of 0.5 percent while consensus had expected a flat outcome). Additionally, second quarter growth was revised down by one-tenth of a point to 0.2 perecent. With these outcomes, on-year GDP growth now stands at 0.6 percent y/y, the lowest since the global financial crisis of 2008-09, DBS reported.

The surprising drop was more about quantity than where it occurred. Manufacturing fell by 17.4 percent q/q saar, where low single-digit falls had been expected. It is now down by 1.1 percent compared to one year ago. Construction growth remained positive at 0.5 percent and 2.5 percent, in quarterly and on-year terms respectively.

Moreover, the government has been taking up the slack in private demand over the past two years. In the year ending June, for example, government spending accounted for 50 percent of all GDP growth. That proportion surely rose in the year ending September although demand-side data has yet to be released. Service sector output fell by another 1.9 percent q/q.