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Singaporean economy avoids technical recession in Q3 2019, GDP grows 0.1 pct year-on-year

Singaporean economy avoided a technical recession in the third quarter. The advance third quarter GDP grew 0.1 percent year-on-year, as compared with consensus expectations of a rise of 0.2 percent and 0.1 percent recorded in the prior quarter. On a seasonally-adjusted quarter-on-quarter annualized basis, the economy grew 0.6 percent, whereas the second quarter data was upwardly revised to a fall of 2.7 percent from a fall of 3.3 percent.

However, it does detract from the fact that the economy rose just 0.4 percent in the first three quarters of the year and seen around this pace for 2019, said Commerzbank in a research report. This would be at the lower end of the government’s 0 to 1 percent projection for 2019. The manufacturing sector mainly weighed on growth because of the continued downturn in the global electronics sector.

For the bi-annual MAS policy, they “reduced slightly” the slope of the SGD NEER. There was no change to the centre of the policy band and the band width. This was the first easing since 2016 and after tightening policy twice in 2018. This was a minor adjustment and less than what the market was expecting given weak inflation and downside risks to growth.

MAS underlined that the output gap turned slightly negative and this should keep inflation benign. It highlighted that it is “prepared to recalibrate monetary policy should prospects for inflation and growth weaken significantly”.

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