Singapore’s economy contracted sharply in the September quarter, according to the advance GDP estimate released by the Singaporean Ministry of Trade and Industry (MTI) earlier today.
GDP contracted 4.1% in seasonally-adjusted annual terms (SAAR), an outcome that was well short of forecasts for an increase of 0.3%.
Previously the economy grew 0.2% on a SAAR basis.
It was the sharpest decline since the September quarter of 2012.
The poor quarterly result saw the year-on-year growth rate slow to just 0.6%, below the 1.7% pace expected and downwardly-revised 2.0% level of Q2.
It was the weakest growth rate recorded since the June quarter of 2009.
This table from Statistics Singapore breaks down the headline GDP figure by sector. It was a tale of strength in construction activity being unable to offset weakness from manufacturing and services, particularly in the former.
The MTI will release its preliminary GDP estimate as part of its Economic Survey of Singapore in November.
Coinciding with the release of the GDP report, the Monetary Authority of Singapore (MAS) released its latest monetary policy statement, maintaining the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) at zero per cent.
It also stated that “a neutral policy stance will be needed for an extended period to ensure medium-term price stability”.
The MAS uses exchange rate adjustments to manage inflation, as opposed to interest rates.
On the outlook for economic activity, the MAS said that the “economy is projected to grow at a slower pace in 2016 than envisaged in the April policy review”.
Nor does it expect that growth will shoot the lights out in 2017.
“GDP growth is on current indications not expected to pick up significantly in 2017, reflecting weak global demand and the cyclical as well as structural factors weighing on Singapore’s exports,” it said.