Singapore GDP contracted 5.9% in third quarter

The advance estimate for Singapore Gross Domestic Product (GDP) third quarter growth rate was released on 12 October. It was reported that the third quarter GDP contracted 1.5% on a quarter-on-quarter seasonally-adjusted annualised basis. With the latest report on the economy, the third quarter’s GDP contracted more than estimated. The contraction was 5.9% and this came after second quarter’s growth rate of 0.5% (thus avoiding a technical recession).

All sectors went into negative territory on quarter-on-quarter basis. The worst performing sectors were Construction, contracting at 17.2% and Manufacturing, contracting at 9.6%.

Ministry for Trade and Industry (MTI) now lowered GDP growth forecast for the whole year to be around 1.5%, instead of the earlier forecast of between 1.5% to 2.5%. For 2013, the forecast is growth of 1.0% to 3.0% because of uncertain global environment.

Inflation

Inflation, measured by Consumer Price Index (CPI), for third quarter was 4.2% higher compared to a year ago. Housing costs increased by 6.3%; Transport costs increased by 7.1%; Food prices rose by 2.2%; Healthcare costs increased by 5.1%.

Comments

Singapore economy contracted 5.9% in third quarter on quarter-on-quarter basis, though year-on-year basis, it grew by mere 0.3%. Inflation remained elevated at 4.2% in the quarter. This however was moderated from 5.3% in the second quarter. With twin problems of negative GDP growth rate and higher inflation, it is not good news for workers, retirees and investors. Year-end bonus of workers will be affected negatively, retirement fund has to content with rising cost of living, investments are affected by poor economy both locally and internationally.

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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