Singapore GDP Grows at Slower Pace of 6.5% in Q3; MAS Tightens Singdollar Policy

Singapore's economy grew at a slower pace of 6.5 percent year-on-year in the third quarter of 2021, according to advance estimates by the Ministry of Trade and Industry (MTI).

Gross domestic product (GDP) rose 6.5 percent on a year-on-year basis in the July-September period, moderating from 15.2 percent growth in the previous quarter, said the MTI.

The pace of growth was weaker than the 7 percent forecast by economists in a Monetary Authority of Singapore survey last month, while a Bloomberg poll had predicted a 6.6 percent expansion.

Singapore assets under management growth declines year-on-year
Monetary Authority of Singapore (MAS) Reuters

However, on a quarter-on-quarter seasonally adjusted basis, MTI data showed the economy expanded by 0.8 percent in the third quarter of this year, a reversal from the 1.4 percent contraction in the preceding quarter, reported The Straits Times.

Q2 saw a 15.2 percent jump, which has been revised from 14.7 percent. This was due to low base effects, as the country during the same period last year was in the midst of a 8-week "circuit breaker", or partial lockdown, according to the Business Times.

The easing in GDP development was "anticipated", given the return to the Part 2 (Heightened Alert) and tightened Covid-19 restrictions in July, mentioned Selena Ling, head of treasury analysis and technique at OCBC Financial institution.

"The Singapore financial system is tipped to stay in above pattern development within the quarters forward, barring a world resurgence of the virus or a setback within the reopening tempo," she added.

MAS Unexpectedly Tightens Singdollar Policy

The Monetary Authority of Singapore, the country's central bank, unexpectedly tightened monetary policy on Thursday (October 14), saying the move would ensure medium-term price stability amid mounting cost pressures caused by supply constraints and the global recovery.

In its half-yearly monetary policy statement, the Singapore central bank said it would "raise slightly" the slope of the Singdollar nominal effective exchange rate (S$NEER) policy band from zero per cent previously, reported CNA.

This is the MAS' first policy tightening move since 2018 when it increased the slope of the Singapore dollar's policy band twice that year to allow for "a modest and gradual" appreciation.

The Singapore dollar rose around 0.2% to a three-week high of 1.349 per U.S. dollar following the central bank's move.