Singapore's 4Q GDP growth to hit 0.6%

Wholesale trade predicted to still drag into 4Q16.

The Singapore economy expanded by a revised 1.1% yoy (-2.0% qoq saar) in 3Q16, up from the initial flash estimate of 0.6% yoy (-4.1% qoq saar) and close to analysts' forecast of +1.1% yoy (-2.3% qoq saar), OCBC said in a report.

Notably, manufacturing stabilised for the second straight quarter and expanded by 1.3% yoy (-9.0% qoq saar) in 3Q16, whereas services flatlined at 0% yoy (-1.3% qoq saar which marked the third consecutive quarter of sequential contraction).

Here's more from OCBC:

The services sector was largely weighed down by wholesale trade due to weakness in petroleum and petroleum products, but even the bell-weather finance & insurance sector proved a drag (-0.7% yoy and -4.7% qoq saar) amid weakness in offshore financial intermediation, fund management and security dealing segments.

Construction provided a buffer, albeit growth also moderated from 2.0% yoy in 2Q16 to 1.6% yoy in 3Q16, aided by public sector construction works such as civil engineering works.

We anticipate that 4Q16 GDP growth could be in the range of 0.6% yoy (+4.8% qoq saar) to bring full-year growth to 1.3% yoy, which is close to the narrowed 2016 official growth forecast of 1-1.5% yoy.

The familiar drags from wholesale trade and finance & insurance segments will likely extend into 4Q16. IESingapore now tips 2016 NODX growth forecast at between -5.5% to -5% yoy, which will come as no surprise since the year-to-date NODX growth is around -5% and the picture will change little into the year-end, notwithstanding the slight improvement in manufacturing, namely semiconductors.