Oct 14, 2011

The Singapore economy grew 5.9 percent in the third quarter, while GDP rose 1.3 percent on a seasonally-adjusted quarter-on-quarter annualised basis, according to advance estimates released by the Ministry of Trade and Industry (MTI).

The country’s GDP growth implies that its economy has avoided a recession after contracting in the second quarter.

According to the MTI, Singapore’s manufacturing sector, which contributes a quarter of the GDP, has declined for three consecutive months, although weakness in the electronic sector was partly offset by strength in the pharmaceutical sector, where output can be highly volatile.

The MTI said it expects 2011 GDP growth to be around five percent, against an earlier forecast of between five and six percent.

Meanwhile, the Monetary Authority of Singapore (MAS) will continue to raise the local currency but at a slower pace, effectively supporting the economy and putting less emphasis on containing inflation.

“The MAS is clearly dovish on growth and it is also slightly dovish on inflation,” said Edward Lee, an economist from Standard Chartered Bank. “We barely escaped recession in the third quarter as most of the growth came from the highly volatile biotech sector. The underlying trend is still for softer growth.”

The central bank said it will continue to aim for a “modest and gradual appreciation” of the local currency’s nominal effective exchange-rate policy band in the period ahead.

“Given the stresses and fragility in the advanced economies, the prospects for growth in Singapore's major trading partners have deteriorated,” it said.

Info courtesy - PropertyGuru.com.sg