Singapore’s Q3 GDP tops initial estimates on financial services, tourism

SINGAPORE: Singapore’s economy grew faster than initial estimates in the third quarter, helped by a resurgence in tourism and service sector activity, although authorities warned of risks to the outlook from inflation and geopolitics.

Gross domestic product (GDP) rose 1.1% year-on-year, government data showed on Wednesday, higher than the initial estimates of 0.7% released last month.

On a quarter-on-quarter seasonally-adjusted basis, gross domestic product expanded 1.4% in the July to September period, compared with 1% in advanced estimates.

The trade ministry narrowed GDP growth to around 1.0% in 2023 from the lower half of 0.5% to 1.5% range.

It expects GDP growth in 2024 to be from 1.0% to 3.0%.

“Better than expected third quarter GDP growth confirms that the economy is on track for a stronger recovery going into 2024,” said Maybank economist Chua Hak Bin.

Chua added that the upgrade from flash estimates was due to improvements in the services sector with financial services expanding and accommodation and retail trade supported by buoyant tourist arrivals.

Gabriel Lim, permanent secretary of policy at the Ministry of Trade & Industry, said during a press conference that significant downside risks in the global economy remain.

“First, sticky core inflation in advanced economies could induce central banks to maintain current high interest rates for longer,” said Lim. “Second, an escalation or widening of the Israel-Hamas conflict or war in Ukraine could lead to renewed supply disruptions and commodity price shocks.”

The trade-reliant economy narrowly avoided a technical recession – defined as two consecutive quarter-on-quarter contractions – when it posted a slight expansion in second quarter GDP.

While trade data shows exports increasing in recent months, non-domestic oil exports have fallen for 13 consecutive months.

In October, the central bank left monetary policy settings unchanged as inflation in the city-state moderated from a peak of 5.5% in January to 3% in September. It said that reflected economic prospects that were muted in the near term but expected to improve in the second half of 2024.

Edward Robinson, deputy managing director of the Monetary Authority of Singapore, said during the press conference current monetary policy settings are appropriate and that the bank expects domestic interest rates to track global interest rates. – Reuters