2013 growth forecast raised to 3.5%-4%
SINGAPORE yesterday raised its full-year growth forecast for this year to between 3.5 and 4 per cent, as third-quarter GDP numbers exceeded estimates, helped by further signs of a recovery in manufacturing and continued strength in services.
In a statement, the Ministry of Trade and Industry (MTI) also said the economy will expand as much as 4 per cent next year.
The city-state, which narrowly dodged a recession last year amid flagging demand for its exports, began a turnaround in the second quarter as manufacturing recovered and trade-related services boomed.
"Externally oriented sectors such as manufacturing, wholesale trade and transportation & storage are likely to support growth, in line with a slight pickup in the global economy," MTI said in its statement.
"Domestically oriented sectors such as construction and business services are also expected to remain resilient in the fourth quarter."
The upgrade means the economy will have stronger momentum going into next year, although the medium-term outlook will depend on the pace of global growth.
MTI added that next year's growth will likely be between 2 and 4 per cent, supported by a slow recovery in the United States and euro zone.
"We've been seeing some green shoots coming from manufacturing recently," Mr Irvin Seah, an economist at DBS Group Holdings in Singapore, said before the report. "We're seeing improvement across Asia."
However, Singapore also revised its trade forecasts lower, with total trade now expected to grow by 1-2 per cent this year, with non-oil domestic exports contracting by 4-5 per cent.
"A lot of the manufacturing growth in Singapore this year has been front-loaded already," said Barclays economist Joey Chew.
"Manufacturing has risen way ahead of exports and so, as export demand catches up, there might be some softness or sluggishness in manufacturing," she said.
The gross domestic product grew 5.7 per cent in the third quarter from a year ago, better than the advance estimate of 5.1 per cent flagged in October and the median estimate of economists polled by Reuters.
The expansion was led by financial services, which grew by 10.5 per cent during the quarter from a year ago.
On an annualised and seasonally adjusted rate, GDP rose 1.3 per cent in the third quarter from the preceding three months, slower than the blistering 17.4 per cent achieved in the second quarter.
Still, the quarter-on-quarter figure was better than the advance estimate of a 1 per cent contraction.
The Monetary Authority of Singapore said on Oct 14 it will maintain a modest and gradual appreciation of the currency, forgoing stimulus as labour shortages and record home prices fuelled inflation.