Singapore economy grows 5.2% in Q3
Forecast for growth this year raised to 3% to 3.5%
Singapore's economy is on track for a standout performance this year due to an improved global outlook, with the labour market showing signs of recovery.
But economists expect growth to moderate in the coming year due to a possible tapering in electronics demand and the slowdown in key markets such as China.
The Ministry of Trade and Industry (MTI) has upgraded its forecast for economic growth this year to 3 per cent to 3.5 per cent, up from an earlier estimate of 2 per cent to 3 per cent.
It announced this alongside third-quarter economic growth data released yesterday, which showed that Singapore's economy expanded 5.2 per cent in the July to September period over the same quarter a year earlier - its strongest showing since 2013.
The headline figure was revised upwards from last month's advance gross domestic product (GDP) growth estimates of 4.6 per cent. This also beat economists' expectations of a 5 per cent expansion, according to a poll by Bloomberg.
The robust showing comes amid a more upbeat global environment and strong demand for electronics, MTI permanent secretary Loh Khum Yean said yesterday.
Trade agency IE Singapore now expects non-oil domestic exports to expand by 6.5 per cent to 7 per cent this year, up from a forecast of 5 per cent to 6 per cent in August.
The labour market is also showing signs of recovery.
Contrasting viewsDBS economist Irvin Seah
The main story behind the GDP numbers is that the recovery is broadening
At least for next year, we are not terribly gung-ho about the strength of the economy and wages.Nomura economist Brian Tan
Job losses appear to have eased as retrenchments in the third quarter came down marginally to 3,600, from 3,640 in the previous quarter.
Signs indicate that the labour market will also "improve slightly" alongside the increase in hiring during the year-end festive season, said Mr Terence Ho, divisional director of the manpower planning and policy division at the Ministry of Manpower.
Manufacturing has been this year's breakout star, but economists say it is about time for services, which make up two-thirds of the economy, to shine.
"The main story behind the GDP numbers is that the recovery is broadening," said DBS economist Irvin Seah.
Services expanded 3 per cent year-on-year in the third quarter, which was its strongest print since 2015.
All service clusters, except for accommodation and food services, grew in the third quarter.
Economists are mostly upbeat about future prospects - even for the shrinking construction sector.
Ms Yong Yik Wei, director of economics at the MTI, expects improvement in construction demand in the coming year as public-sector projects are brought forward.
Looking ahead to next year, the Singapore economy is expected to moderate compared with this year, but "remain firm", said MTI. The official forecast is for growth of 1.5 per cent to 3.5 per cent next year.
Nomura economist Brian Tan is less sanguine about next year.
He does not believe that this year's pace of growth is likely to be sustained, and sees little spillover from semiconductor-related sectors on the rest of the economy.
He added that the employment situation is still "not as strong as it should be".
"At least for next year, we are not terribly gung-ho about the strength of the economy and wages. It is a question of whether this 5 per cent (GDP growth) really reflects what is on the ground and, right now, it does not feel that way," he said.