Singapore revised its third-quarter economic growth upward on Thursday, signaling some stabilization in the bellwether Asian economy that has been hit by the trade war between the United States and China.
Less gloomy prospects for the city-state also prompted the government to tighten its 2019 growth projection toward the top of its previous forecast range while the 2020 outlook suggested a modest improvement with exports seen reversing their decline.
“It’s a sign that conditions are not too pessimistic and that there are still some sectors which are still getting modest growth,” said Jeff Ng, an economist at Continuum Economics.
“We expect some stabilization in growth momentum ahead although it will be still below trend.”
Gross domestic product (GDP) rose 0.5% year-on-year, data from the ministry of trade and industry showed, faster than the 0.1% growth seen in the government’s advance estimate and matching the 0.5% predicted in a Reuters poll. It was slightly higher than a revised 0.2% growth in the previous quarter
Singapore’s economy grew 2.1% in the July-September period from the previous three months on an annualized and seasonally adjusted basis, compared with the government’s initial estimate of a 0.6% expansion and the median forecast in a Reuters survey of 2.1% growth. It reversed from a 2.7% contraction in the second quarter.
The government revised its official growth forecast range for 2019 to 0.5% to 1.0% from 0.0% to 1.0% previously. The economy is then forecast to grow 0.5% to 2.5% in 2020 thanks to an expected recovery struggling electronics sector.
Singapore’s central bank eased monetary policy in October for the first time in three years to shore up slowing growth. Speaking after Thursday’s data, Edward Robinson, chief economist at the Monetary Authority of Singapore, said that policy remained appropriate.
“Our base case is that (the central bank) will hold monetary policy in 2020. We are not looking at further easing now that growth is starting to pick up,” said Lee Ju Ye Lee, an economist at Maybank Kim Eng.
Singapore, which is due to hold an election within months, has been hit hard by the escalating U.S.-China trade war and a broader global slowdown, cutting full-year growth forecasts twice this year.
Its manufacturing sector, which has taken a hit this year, posted its first rise in five months in September on a surge in pharmaceutical output, but electronics output continued to contract.
Electronics manufacturing is expected to pick up in the next year, helped partly by 5G development, said Kelvin Wong, assistant managing director at the Economic Development Board. The country is planning to roll out the next generation of mobile communications in 2020.
Singapore’s exports in October shrank for the eighth straight month and were worse than analysts’ expectations as shipments of electronics slid, official data showed on Monday.
Exports were forecast to shrink 9.5% to 10.0% in 2019, a faster deterioration than the previous 8.0% to 9.0% forecast, according trade agency Enterprise Singapore. They are then expected to grow 0.0% and 2.0% in 2020.
Reuters | SINGAPORE