SINGAPORE — Singapore narrowed its annual forecast for economic growth to between 0.5 per cent to 1 per cent on Thursday (Nov 21) as official data showed the economy picking up pace slightly in the third quarter.

This marks the third revision in the country’s 2019 growth forecast, which was previously penciled in as between 0 to 1 per cent.

For 2020, the Ministry of Trade and Industry (MTI) said growth is expected to fall between 0.5 per cent to 2.5 per cent.

The economy grew 0.5 per cent year on year in the third quarter, slightly higher from the previous quarter’s revised 0.2 per cent and an earlier official forecast of 0.1 per cent.

On a quarter-on-quarter seasonally adjusted annualised basis, gross domestic product (GDP) expanded by 2.1 per cent. This is a reversal from the previous quarter’s 2.7 per cent drop and beat the Government estimate of 0.6 per cent.

While global growth remains weak, MTI said there are “signs of stabilisation” in the global economy since its last report in August.

Domestically, the manufacturing sector performed better than expected in the third quarter, on the back of robust expansions in the biomedical manufacturing cluster and the aerospace segment of the transport engineering cluster, even though the electronics cluster continued to contract.

For the remaining quarter of the year, MTI expects the performance of the manufacturing sector and trade-related services sectors, such as wholesale trade, to remain subdued in view of the ongoing downswing in the global electronics cycle.

However, sectors such as construction, information and communications, finance and insurance, and education, health and social services are projected to continue to post steady growth, it added.

Next year, global growth is projected to see a “modest pickup”, led by an improvement in the growth outlook for emerging market and developing economies.

Still, growth in several of Singapore’s key final demand markets, such as the United States and China, is expected to ease.

There are also lingering uncertainties in the global economy. This includes the US-China trade tensions, with existing tariffs still in place and the risk of additional tariffs being imposed; a steeper-than-expected slowdown of the Chinese economy and Brexit-related uncertainties.

Meanwhile, ongoing uncertainties in Hong Kong and geopolitical tensions in the Middle East could also lead to financial market volatility, and have negative spillover effects on the region and Singapore.

Given the growth outlook for Singapore’s key final demand markets and the projected recovery in the global electronics cycle in the year ahead, MTI said it expects growth in the Singapore economy to pick up modestly in 2020, as compared to 2019.

In particular, the manufacturing sector is expected to return to positive growth, led by a gradual recovery in the electronics and precision engineering clusters.

Improved conditions in these clusters is also likely to support growth in related sectors such as wholesale trade, it said. CNA

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