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SINGAPORE'S economy delivered a nice little surprise to observers with a 1.4 per cent gross domestic product (GDP) growth in the third quarter from a year ago, and a corresponding 0.1 per cent quarter-on-quarter growth - narrowly avoiding a technical recession.
Optimism was muted among private-sector economists, however. As manufacturing continues to pull a drag on GDP performance with a 6 per cent contraction, putting a dampener on the 1.6 per cent growth in the construction sector and a 3 per cent expansion for the services sector, economists believe that Singapore's economy is not out of the woods yet.
Here's what economists have to say about latest Q3 GDP figures:
DBS senior economist Irvin Seah: "Despite the close shave, the storyline hasn't changed. Growth outlook remains dicey amid strong external headwinds and domestic restructuring is still a major challenge for companies."
He added: "The service sector remained in expansion mode at 0.8 per cent (QoQ saar) in 3Q '15. In addition, growth for the second quarter has been revised up to +0.2 per cent (QoQ saar), from -1.1 per cent previously (advance estimates). Although it did help the economy avert a technical recession, it didn't quite pick up much slack from the manufacturing sector given its sluggish growth pace. A domestic manpower crunch and heightened risks in the global environment have weighed down the performance of the sector."
Standard Chartered Bank's Asia economist Jeff Ng: "Singapore remains in the period of transition where we are moving towards becoming more services oriented, away from manufacturing. Hence even if manufacturing is weak, it may not impact on overall growth too much."
Market strategist at IG Bernard Aw: "Manufacturing activity remains in the doldrums while growth in financial services was also weak. It is unsurprising, given that global growth remains soft. In fact, the Monetary Authority of Singapore (MAS) assessed that 'the overall outlook for the global economy has softened compared to the review in April'. Slowing growth momentum in China, gradual pickup in economic activity in eurozone and Japan, as well as weak US import demand, are likely to dampen growth prospects in the Asia ex-Japan region. It will also weigh on the external-oriented industries in Singapore in the coming quarters."
Head of research Asia for ING Bank Tim Cordon: "We reiterate our 2 per cent 2015 growth forecast but we are reviewing our zero per cent inflation forecast for downward revision (Bloomberg consensus 2.1 per cent and -0.3 per cent). Our year-end USDSGD forecast is 1.43 (latest 1.40, Bloomberg median 1.44, forward 1.40)."
OCBC: "The near-term outlook remains one of weakness in manufacturing, especially electronics and transport engineering due to tepid external demand conditions, whereas domestic-oriented services should still expand at a moderate pace due to better demand for healthcare and education services as well as pubic infrastructure spending. Given that 2015 growth has so far shaped up to be softer than earlier anticipated, the baseline is tilted for an easier 2016 growth trajectory."