Amid worsening global economic gloom, Singapore has avoided slipping into recession, the latest data release has shown. According to data released by the Ministry of Trade and Industry (MTI) on Monday, the island state's economy expanded 0.1 percent on a year-on-year basis in the third quarter of 2019. On a quarter-on-quarter seasonally adjusted annualised basis, Singapore's economy grew 0.6 percent.
The 0.1 percent growth, however, was disappointing for analysts, who according to a Bloomberg poll, had expected who expected the gross domestic to grow 0.2 per cent. If the economy had registered 1.5 percent growth in the July-September quarter, it would have marked a sharp recovery from the 3.3 percent drop in the second quarter, which was the biggest contraction recorded in seven years. But that was not to be.
One of the reasons for the tepid growth was the continued weakness in the manufacturing sector, which contracted 3.5 percent on a year-on-year basis in the third quarter. "The contraction was due to output declines in the electronics, precision engineering and transport engineering clusters, which more than offset output expansions in the chemicals, biomedical manufacturing and general manufacturing clusters," the ministry said, according to the Straits Times.
On the upside, the construction sector grew by 2.7 percent. "Growth in the sector was supported by a pick-up in both public and private sector construction activities," the ministry added.
On October 8, a Reuters poll had predicted that Singapore's economy would avert a technical recession in the third quarter. The poll of 11 economists shows that gross domestic product (GDP) may have increased 1.5 percent on a quarter-on-quarter, seasonally adjusted basis in July-September.
There have been reports that the Monetary Authority of Singapore (MAS) was likely to ease its exchange-rate based monetary policy at semi-annual meeting scheduled for later this month in view of sluggish growth.
Singapore's economic growth had slowed sharply after the MAS moved out of the neutral stance last April and went for its policy first tightening move in six years. Export-dependent Singapore economy was hit hard by the worsening China-US trade war and a consequent dampening of global demand.
Most competitive global economy
Meanwhile a World Economic Forum report said last week that the island state edged past the US as the world's most competitive economy. According to the "Global Competitiveness Report 2019," Singapore reached the top spot among 141 countries and regions.
While the report hailed Singapore's high performance in areas like the financial system, market efficiency and macroeconomic stability, it also noted that the south-east Asian city state should promote entrepreneurship and further improve its skills base in order to become a global innovation hub.