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SINGAPORE – Singapore’s economy rebounded in the third quarter from the slump in the breaker period of the previous three months thanks to its manufacturing sector.
The Republic’s gross domestic product (GDP) increased 7.9 percent on a quarterly seasonally adjusted basis in the July-September period, according to advanced estimates from the Ministry of Commerce and Industry (MTI) released on Wednesday (October 14). ). .
The rebound comes after a 13.2% quarter-on-quarter decline in the second quarter that included the April 7-June 1 period of strict restrictions on mobility and business activity to curb the coronavirus pandemic. Singapore began a gradual reopening in June, prompting a steady recovery in economic activity.
In year-on-year terms, the economy contracted 7 percent, a marked improvement from the 13.3 percent drop in the second quarter.
However, the year-on-year contraction was slightly worse than the 6.8 percent drop forecast in a Reuters poll of 11 economists.
MTI did not revise its full-year GDP forecast range of -5% to -7%.
In a key change in the way it reports GDP data, MTI, starting with Monday’s flash figures, stopped reporting quarterly seasonally adjusted growth rates on an annualized basis. This was due to the fact that the annualized data tend to be misinterpreted if they are quoted “without context”, that is, without explaining that it is an annualized rate that extrapolates the real GDP growth of the reference quarter to three more quarters, the ministry explained. on their website.
“In particular, the public may end up misinterpreting the performance of the economy when there are large changes in real GDP from the previous quarter that are unlikely to continue for the next three quarters,” MTI said, citing the example of the decline in the second – GDP for the quarter due in large part to the circuit breaker.
A Reuters poll had forecast third-quarter GDP to rise 35.3 percent on an annualized and seasonally adjusted basis. Singapore’s major local banks, DBS, OCBC and UOB, expected GDP to rise between 51.5 and 31 percent on the same basis.
According to the Department of Statistics website, third-quarter GDP expanded 35.4% quarter-on-quarter on an annualized and seasonally adjusted basis. Second quarter GDP on the same basis has been revised down to a contraction of 43.3 percent.
MTI in its statement said: “The best performance of the Singapore economy in the third quarter came as a result of the gradual reopening of the economy after the switch.”
The rebound was mainly due to the manufacturing sector which grew 2 percent year-on-year in the third quarter, a reversal from the 0.8 percent contraction in the previous quarter, the ministry said.
Selena Ling, head of research and treasury strategy at OCBC, said: “While third-quarter GDP growth was slightly weaker than our forecast of -6.5 percent year-on-year, the silver lining was manufacturing.”
MTI data showed that the construction sector contracted by 44.7 percent, extending the 59.9 percent decline in the previous quarter.
Service industries also contracted, down 8 percent year-on-year, though better than the 13.6 percent drop in the second quarter.
MTI said that construction production in the third quarter remained weak due to the slow resumption of construction activities due to the need for construction companies to implement safe management measures for a safe restart.
However, on a seasonally adjusted quarter-on-quarter basis, the construction sector grew by 38.7%, a pick up from the sharp 59.4% contraction recorded in the second quarter, when most construction activities had to stop due to to the Circuit breaker and movement restrictions in the dormitories of foreign workers.
Other bright spots in the economy were the finance and insurance and information and communications sectors, which posted sustained growth during the quarter.
On a seasonally adjusted quarter-on-quarter basis, service industries expanded 6.8 percent, reversing the 11.2 percent decline seen in the second quarter, MTI data showed.
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