Singapore's economy showed robust growth, expanding by 4.1% year-on-year in the third quarter of 2024, marking a significant improvement from the previous quarter's increase of 2.9%. These preliminary estimates, released by the Ministry of Trade and Industry, indicate a strong continuing recovery. In a detailed analysis, the seasonally adjusted quarter-on-quarter Gross Domestic Product (GDP) rose by 2.1%, a notable acceleration from the modest growth of 0.4% observed in the second quarter. The manufacturing sector, a crucial driver of the economy, rebounded strongly with a year-on-year increase of 7.5%, bouncing back from a contraction of 1.1% in the prior quarter.
This increase can be attributed to output expansions across all clusters except for biomedical manufacturing, showcasing a remarkable quarterly increase of 9.9%. The resilience in manufacturing signals a positive shift in industrial activity. Construction also contributed positively, growing by 3.1% year-on-year, bolstered by rising output in the public sector construction segment.
However, construction growth on a quarter-on-quarter basis remained flat, down from 3.4% in the previous quarter, indicating some challenges in maintaining momentum. The services sector displayed mixed results: wholesale and retail trade, along with transportation and storage, expanded by 3.5% year-on-year.
However, these sectors faced a 0.6% contraction on a quarter-on-quarter basis, reversing the previous quarter's 2.1% growth and suggesting challenges in consumer spending and logistics. Further insights reveal that the group encompassing information and communications, finance and insurance, and professional services recorded a year-on-year increase of 4.3%, albeit down from 5.4% in Q2.
On a quarter-on-quarter basis, this group showcased a growth of 1.6%, indicating resilience in professional services despite economic headwinds. Meanwhile, other service sectors experienced a 1% year-on-year rise, with the accommodation sector leading the way amid increased arrivals of international visitors.
This sector recorded a quarter-on-quarter increase of 0.8%, recovering from a prior contraction, underscoring the gradual revival of tourism. Looking forward, the Monetary Authority of Singapore (MAS) is expected to unveil its policy statement shortly. According to ING Research, there is a strong likelihood that it will opt to trim the rate of appreciation of the Singapore Dollar Nominal Effective Exchange Rate (SGD NEER).
This reflects the adjustments being made in response to the financial landscape. ING further noted that three-month interest rates have dropped by 75 basis points since July, a development that suggests the MAS is actively working to manage the SGD NEER, aiming to keep it within the upper limits of the current monetary policy band.
Such developments are crucial, as they highlight the MAS's approach to sustaining economic stability and fostering recovery in various sectors..