Singapore's GDP grows at slower pace of 6.5% in the third quarter: Advance estimates

SINGAPORE — Singapore’s economy grew at a slower pace of 6.5 per cent year-on-year in the third quarter of 2021, advance estimates from the Ministry of Trade and Industry (MTI) showed on Thursday (Oct 14).

This was a slowdown from the 15.2 per cent year-on-year growth in the previous quarter. 

On a quarter-on-quarter seasonally adjusted basis, Singapore’s gross domestic product (GDP) grew by 0.8 per cent in the third quarter, after a 1.4 per cent contraction in the previous three months. 

Separately, the Monetary Authority of Singapore (MAS) on Thursday unexpectedly tightened monetary policy, saying the move will ensure price stability over the medium term.

In its half-yearly monetary policy statement, the Singapore central bank said it would “raise slightly” the slope of the Singdollar nominal effective exchange rate (S$NEER) policy band from zero per cent previously.

This is the MAS’ first policy tightening move since 2018 when it increased the slope of the Singapore dollar’s policy band twice that year to allow for “a modest and gradual” appreciation.

SECTORAL PERFORMANCE

The easing in GDP growth was "expected", given the return to the Phase 2 (Heightened Alert) and tightened Covid-19 restrictions in July, said Ms Selena Ling, head of treasury research and strategy at OCBC Bank.

"The Singapore economy is tipped to remain in above trend growth in the quarters ahead, barring a global resurgence of the virus or a setback in the reopening pace," she added.

The manufacturing sector grew by 7.5 per cent on a year-on-year basis in the third quarter, extending the 18 per cent growth in the previous quarter.

Growth was supported by output expansions in all clusters, particularly the electronics and precision engineering clusters which "continued to post strong growth, driven by sustained global demand for semiconductors and semiconductor equipment", said MTI. 

The construction sector expanded by 57.9 per cent in the third quarter, slowing from a growth of 117.5 per cent in the preceding quarter. 

MTI said this growth was "largely due to low base effects given the slow resumption of construction activities after the 'circuit breaker' period last year". 

The services producing industries expanded 5.5 per cent in the third quarter. Among the sectors, wholesale and retail trade and transportation and storage grew by 5 per cent, extending the 8.5 per cent growth in the previous quarter.

While the wholesale trade sector grew on the back of a pickup in external demand, growth in the transportation and storage sector was partly due to low base effects, said MTI, as strict border restrictions had "weighed heavily" on the air transport segment in the third quarter of last year.

The information and communications, finance and insurance and professional services sectors collectively expanded by 7.7 per cent, extending the 10.1 per cent growth in the preceding quarter.

The remaining group of services sectors — accommodation and food services, real estate, administrative and support services and other services sectors — grew by 3.1 per cent, moderating from the 14.5 per cent expansion registered in the previous quarter. 

Within the group, the real estate and other services sectors expanded, while the accommodation and food services and administrative and support services sectors contracted, MTI said. 

"The weak performance of the accommodation and food services and administrative and support services sectors was primarily due to ongoing travel restrictions, as well as tighter domestic restrictions during the quarter to slow the community spread of the virus," said the ministry. 

The Singapore economy is projected to recover this year after shrinking 5.4 per cent last year in the country’s worst recession since independence.

The official growth forecast range for 2021 was last upgraded in August to 6 to 7 per cent. CNA

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