2020 tipped to bring modest growth
MTI also ups this year's growth forecast to 0.5%-1%
After a difficult year in which the Singapore economy was buffeted by the trade war and a slump in the electronics sector, the worst may be over.
Next year is tipped to bring modest growth and most expect it to be stronger than in 2019.
Manufacturing, which makes up about a fifth of the economy, is showing promise of recovery, and is likely to start expanding again next year. The sector has declined for three straight quarters and has been a constant drag on the economy this year.
Experts and the Ministry of Trade and Industry (MTI) said gradual growth in the electronics segment as consumer demand picks up is helping with this turnaround.
In turn, this would spur growth in related sectors like wholesale trade.
Amid these bright spots, the MTI announced that the economy is expected to grow by 0.5 per cent to 1 per cent this year. It had previously been forecast to grow by 0 per cent to 1 per cent.
The outlook is brighter for next year, with the economy expected to grow 0.5 per cent to 2.5 per cent amid the potential manufacturing recovery.
Standard Chartered Bank chief economist for Asean and South Asia Edward Lee indicated that global portents were good. The trade war seemed to be de-escalating, many countries had eased their monetary policies, and fiscal support in economies like China and India may push growth up next year.
Again, manufacturing was expected to be a key driver.
"The manufacturing sector is expected to return to positive growth, led by a gradual recovery in the electronics and precision engineering clusters," said Permanent Secretary for Trade and Industry Gabriel Lim.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye noted the sector is likely to see recovery and supply chains are shifting towards the region, which will help drive growth for the rest of 2019 and next year.
In the third quarter, the manufacturing sector shrank 1.7 per cent from the same period last year - an improvement on the 3.3 per cent plunge in the preceding quarter.
Overall, the economy grew 0.5 per cent in the third quarter from a year ago - better than August flash estimates of 0.1 per cent and higher than the 0.2 per cent expansion in the previous quarter.
Many pointed to signs that the economy was stabilising and could kick on from here.
CIMB Private Banking economist Song Seng Wun said growth in the third quarter was better than expected and that manufacturing growth can be supported by demand for 5G services, electronics and innovations like cleaner cars.
But he had a caveat, saying: "Much depends on consumer and business confidence in the coming months, which (in turn) depends on jobs, investments and ultimately, on the US-China trade talks."