Singapore is likely to see a sharp decline in its GDP growth in the third quarter, a deceleration that will be headed by the biomedical sector, according to a recent survey conducted by Reuters.
The poll of 15 economists puts Q3 economic growth at 10.8 percent year-on-year, lower than the 16.9 percent and 19.2 percent GDP growth in Q1 and Q2, respectively.
The poll also estimates a median 15.6 percent annualised contraction quarter-on-quarter following seasonal adjustments.
However, the slowdown will not only be seen in the biomedical sector. Global manufacturing purchasing managers’ indices (PMI) have declined sharply in recent months, “suggesting external demand is poised to slow,” said Wu Kun Lung, an economist at Credit Suisse.
Singapore’s PMI has also been below 50, which indicates a manufacturing contraction for two months. “The end of restocking gains should cause other manufacturing sectors (apart from biomedicals) to slow going forward,” said Kit Wei Zheng, an economist at Citi, adding that Citi’s electronics leading indicator is also falling.
“Increasingly sluggish recovery in key export markets and other external uncertainties should drive a moderation in Singapore’s manufacturing activity,” said Alvin Liew, an economist at Standard Chartered.
Meanwhile, the construction and services sectors are likely to see moderate growth in Q3 after a strong performance in Q2.
“Trade-related services are slowing, while tourism-related industries are benefiting from the opening of the IRs, Youth Olympic Games and F1,” said Mr. Kit.
Financial services are expected to perform well due to the growth in private banking and sustained robust business interest in Asia, said Mr. Liew.