Singapore’s GDP saw a spurt of growth in the third quarter thanks to a rebounding manufacturing sector.
Advanced estimates showed that Singapore’s gross domestic product in the three months to the end of September 2024 swelled 4.1% compared to the year before, data from the Ministry of Trade & Industry showed on Monday.
“Singapore’s third quarter GDP of 4.1% year-on-year has surpassed the consensus expectations of around 3.8% due to a resilient US economy, one of Singapore’s top three trading partners, that offset China’s weak internal demand,” Kelvin Wong, a senior market analyst at Oanda, told Diplomatic Network (Asia) in an interview on Tuesday.
Advance GDP estimates, which provide an early snapshot based on preliminary data, offer insights but are subject to revisions. The estimates for the third quarter of 2024 are primarily based on data from the first two months of the period, July and August.
In August, Singapore narrowed its GDP growth forecast to between 2% and 3% for 2024, from between 1.0% and 3.0% , thanks to strong growth in the first half of the year.
Singapore’s Manufacturing sector abuzz
This growth was driven by a robust 7.5% year-on-year expansion in the manufacturing sector, reversing a contraction of 1.1% in the second quarter of this year.
“Growth in the sector was supported by output expansions across all manufacturing clusters, except for the biomedical manufacturing cluster,” the Singapore Ministry of Trade & Industry said on Monday.
Looking more closely at the Manufacturing sector, the Electronics segment added some impetus thanks to global technology trends.
“The electronics cluster was the key growth driver for the manufacturing sector in Q3 supported by the global technology upcycle, driven by the replacement of smartphones and PCs, as well as the broadening adoption of artificial intelligence (AI) applications,” Wong said.
However, this strong performance from the segment may be a one-off, driven by potential factors related to the upcoming US election.
“One of the possibilities could be a front-loading of such electronics and semiconductor-related orders due to the risk of higher trade tariffs if a Trump 2.0 presidency arises,” Wong said.
Other sectors
The Construction sector recorded 3.1% year-on-year growth in the quarter, falling from 4.8% growth in the second quarter of this year. The increase was attributed to public sector construction output.
Wholesale & Retail Trade and Transportation & Storage saw growth of 3.5%, down from 3.6%; Information & Communications, Finance & Insurance and Professional Services grew 4.3%, down from 5.4%; and Accommodation & Food Services, Real Estate, Administrative & Support Services and Other Services increased 1.0%, flat from the quarter prior.
Quarter-on-quarter
Meanwhile, Singapore’s GDP grew a solid 2.9% in the third quarter of this year compared to the second quarter on a seasonally adjusted basis.
“Seasonally adjusted” means that the data has been modified to account for regular, predictable fluctuations that happen during specific times of the year, such as holidays, weather changes, or school schedules.
Segmentally, the Manufacturing sector ramped up 9.9% quarter-on-quarter, compared to a contraction of 1.2% in the second quarter. Meanwhile, the Construction sector neither grew nor contracted, compared to 3.4% growth a quarter prior.
In the services producing industries, Wholesale & Retail Trade and Transportation & Storage cluster shrank 0.6% in the third quarter compared to the second. The same cluster grew 2.1% in the second quarter.
The Information & Communications, Finance & Insurance and Professional Services cluster grew 1.6% compared to 2.1% growth a quarter prior. Accommodation & Food Services, Real Estate, Administrative & Support Services and Other Services saw a 0.8% increase, improving from a 1.3% contraction.
Preliminary GDP
As Singapore’s economy continues to navigate global uncertainties, the manufacturing sector’s performance in the third quarter is a promising sign of resilience. Looking ahead, the island nation’s ability to sustain this momentum will be key to meeting its growth targets for 2024.
The preliminary GDP estimates for the third quarter of this year will be released in the Economic Survey of Singapore next month. The paper will include a performance by sectors, sources of growth, inflation, employment and productivity.
