Singapore’s Q3 GDP likely to show persistent weakness By Reuters

By Xinghui Kok

SINGAPORE (Reuters) – Singapore’s economic growth in the third quarter is expected to remain sluggish as the central bank seeks to balance the task of containing inflation and shoring up the slowing post-pandemic recovery.

Economists polled by Reuters expect preliminary data, due on Friday, to show gross domestic product (GDP) expanding 0.4% in July-September from a year ago amid tepid external demand.

The city state narrowly avoided a technical recession when GDP in the second quarter of 2023 grew 0.1% quarter-on-quarter and 0.5% year-on-year.

Finance minister Lawrence Wong said last month the government does not expect a recession but economic growth has been sluggish.

Manufacturing, one of Singapore’s main growth engines, plunged 12.1% in August from a year ago, its 11th consecutive contraction.

“Flash 3Q GDP estimates will likely show the economy stagnating,” said Maybank economist Chua Hak Bin.

He said while the manufacturing slump could narrow amid more upbeat business expectations, that was “outweighed by easing services growth on the back of fading reopening tailwinds”.

The slow economy poses a challenge for the central bank, which is grappling with inflation that has peaked but not yet eased significantly.

Inflation has cooled from a 14-year high of 5.5% in January and February to 3.4% in August.

In August, the trade ministry narrowed its 2023 GDP growth forecast to 0.5% to 1.5% from 0.5% to 2.5% previously. The economy grew 3.6% in 2022, slowing from an 8.9% expansion in 2021.

Economists expect the central bank to keep monetary policy settings unchanged in a scheduled review this Friday.

The Monetary Authority of Singapore (MAS) left policy settings unchanged at its last review in April, having tightened five times in a row.

This is the last MAS policy review under outgoing central banker Ravi Menon, who held the role since 2011 and will retire on Jan. 1, 2024.

In July, Menon had said MAS would “not switch from inflation-fighting mode to growth-supporting mode”.

(This story has been refiled to correct a typo in paragraph 13)