Singapore’s economy grew 2.2 percent on-year in the third quarter, slowing from 4.1 percent growth in the second quarter, the Ministry of Trade and Industry said on Thursday.
That data spurred MTI to tighten its forecast range for 2018 gross domestic product (GDP) growth to 3.0 percent to 3.5 percent, from 2.5 percent to 3.5 percent previously, it said in a statement.
“The Singapore economy performed broadly in line with expectations in the third quarter, with growth primarily supported by the finance and insurance, manufacturing and business services sectors,” MTI said in the statement. “Taking into account Singapore’s GDP performance in the third quarter, GDP growth in the first three quarters of the year came in at 3.6 percent on a year-on-year basis.”
In the third quarter, the manufacturing sector grew 3.5 percent on-year, slowing from 10.7 percent growth in the previous quarter, it said.
“All clusters within the sector expanded, except for the general manufacturing cluster which contracted on the back of output declines in the printing and miscellaneous industries segments,” it said.
The construction sector contracted 2.3 percent on-year in the third quarter, narrowing from a 4.2 percent contraction in the second quarter, with the segment weighed by weakness in public-sector construction activity, MTI said.
The finance and insurance segment expanded 5.6 percent on-year, slower than the 6.8 percent growth in the previous quarter, supported by the insurance and “others” segments, with the latter getting a boost from the use of more efficient payment systems and cashless transactions, MTI said.
The information and technology sector grew 5.6 percent on-year in the third quarter, slower than the 5.8 percent growth pace in the secnd quarter, bolstered by demand for IT services, MTI said.
For the fourth quarter, MTI said it expected growth would “moderate but remain firm.”
“Outward-oriented sectors such as the manufacturing and finance and insurance sectors are expected to continue to expand, albeit at a more moderate pace, and support GDP growth for the rest of the year,” MTI said.
It added that it expected the external demand outlook for Singapore’s economy would be “slightly weaker” in 2019, compared with 2018, pointing toward expectations U.S. economic growth would moderate amid fading effects from fiscal stimulus and tighter monetary policy. It also noted China’s growth was projected to moderate next year as credit growth slows and external demand softens.
But it had caveats.
“Risks in the global economy are tilted to the downside,” MTI warned.
“There is the risk of a further escalation of the ongoing trade conflicts between the U.S. and its key trading partners, which could trigger a sharp fall in global business and consumer confidence. Should this happen, global investment and consumption spending would decline, with adverse impact on economic growth,” MTI said.
It also pointed to a risk that a faster-than-expected tightening of global financial conditions could spur outflows from emerging markets, creating “vulnerabilities” in some of those economies, particularly ones with higher debt levels.