Singapore's Q3 GDP advance estimate narrowly avoids technical recession

Q3 GDP of Singapore grew marginally, expanding 0.1% q/q saar and 1.4% y/y, better than expected. In addition, the Ministry of Trade and Industry (MTI) revised the country's Q1 growth 20bp lower, to 2.6% y/y, and Q2 growth 20bp higher, to 2.0% y/y. The better-than-expected Q3 performance was driven by marginally stronger activity in services sectors (Q3: 0.8% q/q saar; Q2: 0.2%), mitigating weakness from manufacturing (Q3: -3.6% q/q saar; Q2: -17.4%) and construction (Q3: -0.8% q/q saar; Q2: 12.4%). 

The weakness in manufacturing was in line with expectations, given the soft performance seen in July and August IP, owing to output shortfalls in electronics, biomedical and transport engineering. Construction also showed some payback after a surge in activity in Q2. The growth moderation in construction was centred on private sector activity, partly offsetting support from public residential construction. Services was the silver lining in the release, despite slowing modestly on a y/y basis (Q3: 3.0% y/y; Q2: 3.6%). 

The MAS noted that growth in financial services was weaker due to a slowdown in lending. However, the wholesale trade and transportationsectors were supported by an upturn in oil-related activities in early Q3. All in, the Q3 GDP growth of the economy is expected to be adjusted modestly lower - towards our forecast of -0.4% q/q saar - in the final release (released on 18 November), although it is believed to be accompanied by few job losses, says Barclays.