According to the MTI’s advance estimates, Singapore’s economy grew 0.6% YoY in 3Q16, lower than 2Q16’s 2.0% growth and worse than the street’s expectations of 1.7% growth. On a QoQ seasonally-adjusted annualised basis, the economy contracted by 4.1%, a reversal from the 0.2% growth in the previous quarter. Manufacturing contracted 17.4% QoQ, a pullback from the 2.1% growth in 2Q16, while the construction sector saw growth slow from 1.1% QoQ in 2Q16 to 0.5% in 3Q16.

The services producing industries shrank by 1.9% QoQ, extending the 0.9 % decline in the preceding quarter. As growth in the economy has weakened and is not expected to pick up significantly in 2017, and core inflation will rise only gradually next year, the MAS will maintain the rate of appreciation of the S$NEER policy band at zero percent. The width of the policy band and the level at which it is centred will be unchanged.

Source: OCBC Research - 14 Oct 2016