Singapore narrows 2019 GDP growth forecast to 0.5-1% on biomedical, aerospace showing

SINGAPORE has narrowed its official full-year growth forecast for 2019 to 0.5 to 1 per cent, following a better-than-expected third-quarter economic performance on the back of robust growth in the biomedical and aerospace manufacturing sectors, and early signs that the electronics slowdown may be easing.

This was better than initial expectations of a zero to 1 per cent growth, which had been downgraded from the 1.5 to 3.5 per cent growth forecast the Ministry of Trade and Industry (MTI) made a year ago.

Economic growth for Q3 grew by 0.5 per cent, surpassing an official flash estimate of 0.1 per cent, and coming in slightly higher than the 0.4 per cent expansion that private-sector economists had expected, according to a Bloomberg poll. This is also slightly higher than the 0.2 per cent growth in the previous quarter.

In its first official estimate for 2020, MTI on Thursday said economic growth is expected to be between 0.5 and 2.5 per cent, hinting at a possible recovery following sluggish growth for the most part of 2019. MTI said however that growth in several of Singapore's key final demand markets such as the US and China is expected to ease.

The manufacturing sector shrank by 1.7 per cent year on year, moderating from the 3.3 per cent decline in the preceding quarter. The sector was weighed down by the electronics cluster, which contracted on the back of a decline in output in the semiconductors segment. MTI said all the other clusters in the sector expanded during the quarter, with the biomedical manufacturing cluster posting the strongest growth.

The construction sector expanded by 2.9 per cent year on year, following the 2.8 per cent expansion in the preceding quarter, supported by both public sector and private sector construction works.

The wholesale and retail trade sector contracted by 3.3 per cent year on year, extending the 3.5 per cent decline in the second quarter.

The transportation and storage sector posted flat growth, slowing from the 2.4 per cent expansion in the preceding quarter.

Growth in the accommodation and food services sector came in at 2.0 per cent year on year, faster than the 1.2 per cent recorded in the previous quarter.

The information and communications sector grew by 3.4 per cent year on year, moderating from the 4.1 per cent expansion in the previous quarter.

The finance and insurance sector expanded by 4.3 per cent year on year, extending the 5.1 per cent growth in the second quarter.

Growth in the business services sector came in at 0.9 per cent year on year, slightly faster than the 0.8 per cent recorded in the preceding quarter, supported by the professional services segment.

The "other services industries" posted growth of 2.8 per cent year on year, extending the 2.7 per cent growth in the preceding quarter. Growth was largely supported by the education, health and social services segment, which grew on the back of an expansion in healthcare facilities.