Singapore Q4 GDP growth seen picking up slightly on services boost

SINGAPORE (Reuters): Singapore’s economy is forecast to have expanded at a slightly faster pace in the fourth quarter, with economists expecting the services sector to compensate for a prolonged manufacturing slowdown.

Gross domestic product (GDP) is expected to have expanded 0.8% from the same period a year earlier, according to the median of nine economists’ estimates. The economy grew 0.5% in July-September 2019.

Singapore’s export-oriented economy has been hit hard this year by the drawn-out trade war between the US and China as well as a cyclical downturn in the electronics sector.

“The fourth-quarter advance estimate is expected to pick up mainly on the back of stronger growth in construction and services (finance, tourism-related and business services) sectors, which will offset the continued weakness in the manufacturing sector,” said Maybank Kim Eng economists.

GDP is forecast to have grown 0.4% on a quarter-on-quarter, on a seasonally adjusted and annualised basis in the fourth quarter, according to the median of seven forecasts.

That is slower than the 2.1% expansion in the third quarter when the economy comfortably avoided a recession that was estimated by some analysts.

Last week, data showed that Singapore’s industrial output crashed in November, marking its biggest drop in four years, after rising in the previous two months. “Our 2020 GDP growth forecast for the Singapore economy remains at 1-2% YOY (year-on-year), predicated on a modest manufacturing recovery with the services and construction sectors as providing the growth bulwark,” said OCBC economist Selena Ling. She forecast 2019 GDP growth of about 0.5%.

Singapore’s Ministry of Trade and Industry will release advance GDP estimates for the fourth quarter and the whole year 2019 today.