Singapore economy growth beats forecast in third quarter

Singapore’s economy grew more than expected in the third quarter, data showed Wednesday, while officials narrowed their full-year forecast owing to subdued demand for its exports in key markets including the United States and China.

The 1.1 percent expansion in July-September was driven by the construction industry and services sector, including tourism.

The reading from the trade ministry was better than the 0.8 percent growth expected and well up from the previous three months.

Officials said they saw the economy growing 1.0 percent throughout 2023, against the 0.5-1.5 percent previously estimated.

Since its last forecast in August, the US economy had performed better, the ministry said, but warned inflation-fighting interest rate hikes would weigh on it for the rest of the year.

“However, for the rest of the year, growth in the US and eurozone is projected to moderate due to the cumulative effects of monetary policy tightening,” it said.

“Likewise, China’s growth is likely to slow further amidst ongoing weaknesses in its property sector and domestic consumption, as well as subdued external demand.”

The ministry added that global demand for electronics, one of Singapore’s main exports, “remains sluggish given elevated inventory levels, although there are signs that the downturn may be bottoming”.

Continued growth in tourism arrivals is expected to support aviation and tourism-related businesses, it said.

“Taking into account the performance of the Singapore economy in the first three quarters of the year… as well as the latest external and domestic developments, the 2023 GDP growth forecast… is narrowed to around 1.0 percent, from 0.5-1.5 percent,” the ministry said.

For next year, the ministry said it saw 1.0-3.0 percent growth, with high inflation and an escalation of the conflict between Israel and Hamas or the war in Ukraine among the downside risks.

“The confluence of these factors could weigh on both business and consumer sentiments along with demand, leading to a slowdown in global growth and trade,” it said.