Singapore economy beat expectations with 2.8% growth in Q3

The manufacturing sector finally picked up.

The Singapore economy grew by 2.8% on a year-on-year basis in the third quarter, higher than the street’s expectations of a 2.5% growth and marginally higher than the 2.3% growth recorded in the preceding quarter. 

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 3.1%, a reversal from the 0.3% decline in the previous quarter.

According to data from the Ministry of Trade and Industry, the manufacturing sector expanded by 1.9% year-on-year, a slight improvement from the 1.5 per cent growth in the previous quarter. The expansion was supported primarily by the biomedical manufacturing and chemicals clusters.

On a quarter-on-quarter seasonally-adjusted annualised basis, the sector grew by 2.8%, reversing the 14.9% decline in the previous quarter.

However, growth in the construction sector moderated to 1.7% year-on-year, compared to 3.7% in the previous quarter. This was primarily due to weaker private sector construction activities. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector contracted by 0.3 per cent,following the 4.2% decline recorded in the preceding quarter. 

The wholesale & retail trade sector grew by 2% year-on-year in the third quarter, faster than the 1.8% growth in the preceding quarter. The slight pickup in growth was due to a smaller drag from the retail trade segment, even as the wholesale trade segment grew at a similar pace as in the previous quarter.

Growth in the finance & insurance sector surged to 10.5% year-on-year, from 5.5% in the previous quarter. The sector’s growth was supported mainly by the financial intermediation and insurance segment.

Growth in the accommodation & food services sector improved slightly to 0.9% year-on-year from 0.4% in the previous quarter. On the other hand, growth in the “other services industries” slowed to 1.6 per cent from 2.2% in the second quarter, pulled down by the weak performance in the arts, entertainment & recreation segment. 

“In the first three quarters of 2014, the Singapore economy grew by 3.3 per cent on a year-on-year basis. For the rest of the year, growth is expected to ease slightly on a year-on-year basis, in line with a projected slowdown in the global economy. Externally-oriented sectors such as the manufacturing and transportation & storage sectors are likely to slow, whereas growth in the construction sector will continue to be weighed down by the weakness in private sector construction activities. On the other hand, domestically-oriented sectors like business services are likely to remain resilient. Taking these factors into consideration, MTI expects the Singapore economy to grow by around 3.0 per cent for the whole of 2014,” noted the MTI.