DBS not alarmed by GDP plunge for 3Q10

 The bank said the 18%QoQ saar (10.8% YoY) GDP dip for the quarter is an upward revision from the advance estimates (-19.8% QoQ saar, 10.3% YoY) given the better than expected industrial production growth in September.

In a statement, DBS Bank said the rebound in pharmaceutical production caused the output in the month rose by a solid 26.2% YoY. This will put average manufacturing growth for the quarter at 14.6% YoY, which is higher than the 12.1% expansion noted in the advance estimates.

With the pharmaceutical output having fallen by 45.0% QoQ saar in the third quarter, the most likely direction in the next quarter should be up. “One quarter of down swing will soon be followed by a quarter of rebound as producers embark on new batches of drugs and ramp up production. As such, we believe a turnaround in pharmaceutical production could provide some lift to headline GDP growth in the fourth quarter,” the bank said.