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SINGAPORE, by a long shot, averted a technical recession in the third quarter of 2015 after all - thanks to a significantly stronger-than-expected performance by the services sector. The government's full-year growth forecast, however, has still been adjusted downwards to "close to 2 per cent", compared to its earlier projection of 2-2.5 per cent.
With seasonal adjustments and on an annualised basis, the Singapore economy expanded 1.9 per cent quarter-on-quarter - a reversal from the 2.6 per cent contraction in Q2, the Ministry of Trade and Industry (MTI) said on Wednesday morning.
This is in contrast to an earlier flash estimate of just a 0.1 per cent expansion, and the market's forecast of no growth. The latest data ends months of speculation over whether the economy would dodge two straight quarters of sequential contraction in GDP, given the drag from the manufacturing sector's weak performance.
On a year-on-year basis, the economy grew a better-than-expected 1.9 per cent in Q3, despite a sizeable contraction in the manufacturing sector.
The year-on-year figure beat both the initial flash estimate of 1.4 per cent growth, and the market's expectation that this would remain unrevised.
Pulling up the overall figure was growth in the services sector, which stood at 3.6 per cent year-on-year - at the same pace at that seen in Q2. This was thanks in part to a 6.8 per cent expansion in the wholesale & retail trade sector, due to a stronger performance of the wholesale trade segment.
Quarter-on-quarter, the services sector grew 3.5 per cent - blowing the earlier estimate of just 0.8 per cent growth out of the water.
But because of a fall in output in the transport engineering, electronics, and precision engineering clusters, the manufacturing sector contracted by 6.2 per cent year-on-year, extending the 4.8 per cent decline in the previous quarter. It also marked a poorer performance than the advance estimate of a 6 per cent contraction.
In quarter-on-quarter terms, the manufacturing sector also performed worse than expected with a 4.6 per cent decline. The advance estimate had pointed to a 3.6 per cent contraction.
In addition to adjusting its 2015 growth forecast, MTI also said that the government expects the economy to grow by 1 to 3 per cent in 2016.
"Global growth is expected to improve in 2016, supported by a strengthening of growth in the advanced economies and improvements in most emerging market and developing economies," said MTI, even as it flagged downside risks to the global growth outlook, including the possibility of a "significant drop in demand" in China, should ongoing reforms to rebalance the economy falter.