According to advance estimates, the Singapore economy grew 2.4% YoY, lower than the street’s expectations of a 2.7% growth, but at the same pace of growth in the previous quarter. On a QoQ seasonally adjusted annualized basis, the economy grew by 1.2%, a reversal from the 0.1% contraction in 2Q14. Manufacturing expanded by 1.2% QoQ in 3Q14, in contrast to the 15.1% contraction in the previous quarter. Construction continued to contract, however, at -2.7% QoQ, after 2Q14’s -2.4%. As for services, the sector grew by 1.3%, slower than the 4.8% expansion in 2Q14.

To recap, the MTI is forecasting growth of 2.5-3.5% for this year vs. the 3.9% growth last year. In its Monetary Policy statement released this morning, the MAS also announced that it will maintain its policy of a modest and gradual appreciation of the S$NEER band. There will also be no change in the accompanying parameters, in line with the expectations of OCBC Treasury Research & Strategy, as well as the street. With underlying supply side pressures, the MAS is unlikely to let up in its efforts to maintain a lid on inflation expectations.

Source: OCBC Research - 14 Oct 2014