YoY momentum gained further traction. Singapore’s advance estimate for 3Q 2013 real GDP showed YoY growth picked up to +5.1% YoY from a revised +4.2% YoY in 2Q 2013 (previous: +3.8% YoY) and came in above consensus of +3.8% YoY. The faster YoY growth last quarter was largely driven by manufacturing (3Q 2013: +4.5% YoY; 2Q 2013: +1.3% YoY) underpinned by the transport engineering and the electronics clusters. Services maintained its growth momentum (3Q 2013: +5.7% YoY; 2Q 2013: +5.6% YoY), supported by the steady expansion in “Finance & Insurance” and “Wholesale & Retail Trade” segments. Construction slowed (3Q 2013: +3.6% YoY; 2Q 2013: +6.9% YoY) as weaker public sector construction activities offset growth in private sector construction activities.

No surprise in the annualised QoQ contraction in 3Q 2013 after the surge in 2Q 2103. The economy shrank by an annualized -1.0% QoQ after the +16.9% ann. QoQ surge in the previous quarter. This was less than the consensus estimates of -4.0% ann. QoQ. Last quarter’s sequential contraction in GDP mainly reflected the declines in manufacturing (3Q 2013: -3.4% ann. QoQ; 2Q 2013: +33.5% ann. QoQ) and construction (3Q 2013: -8.8% ann. QoQ; 2Q 2013: +20.9% ann. QoQ) as services slowed sharply (3Q 2013: +1.0% ann. QoQ; 2Q 2013: +12.3% ann. QoQ).

Keeping our 2013-2014 real GDP growth forecast. The advanced estimate for 3Q 2013 implies a +3.2% growth in Jan-Sep 2013. For now, we maintain our full-year real GDP growth projection of +2.8% for this year (2012: +1.3%) and +3.5% for next year. Official growth forecast for 2013-2014 remains at 2.5%-3.5%.

As growth remains susceptible to a “choppy” world economy. With net external demand accounting around 30% of its GDP, Singapore economy benefited from the improvement in global economic conditions – and hence external demand – in 3Q 2013, especially in the major economies, namely the US, Europe, China and Japan. However, the disruption to the US economic growth momentum following the federal government budget and debt ceiling impasse this month, as well as the unexpected drop in China’s exports last month (Sep 2013: -0.3% YoY; Aug 2013: +7.1% YoY), speak of a “choppy” global economy that seems to work on “Murphy’s Law”.  

Source: Maybank Kim Eng Research - 16 Oct 2013