Recent economic surveys conducted by Singapore’s Ministry of Trade and Industry have revealed a notable acceleration in the country’s economic growth for the third quarter of this yearThe preliminary estimates indicate that the Gross Domestic Product (GDP) experienced a year-on-year growth of 4.1%, marking a significant increase from the 2.9% growth noted in the previous quarterWhen adjusted for seasonal fluctuations, the GDP rose by 2.1% compared to the previous quarter, a substantial improvement over the mere 0.4% increase in the second quarter.

One of the key drivers behind this rapid economic expansion is the manufacturing sector, which recorded a robust year-on-year growth of 7.5% in the third quarter, bouncing back from the 1.1% decline witnessed in the previous quarterThis resurgence in manufacturing output has been recognized as a primary factor propelling the overall economic performance

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Notably, aside from the biomedical manufacturing segment, all other manufacturing subsectors also experienced positive year-on-year growthOn a seasonally adjusted basis, manufacturing output surged by an impressive 9.9% compared to the second quarter, contrasting sharply with the 1.2% decline recorded earlier.

Market analysts attribute this growth to an increase in external demand, with the electronics industry in particular seeing a recovery in orders, production levels, and exportsThe electronics sector, which bears significant weight in the manufacturing output, saw its value increase by 2.8% in July year-on-year, overcoming a slump of 6.7% in JuneThis trend accelerated in August, when the electronics sector showcased remarkable growth of 49.1% compared to the previous year, with semiconductors presenting a substantial increase of 54.6%. Driven by this vigorous performance in the electronics industry, the overall manufacturing output rebounded strongly in July, achieving a year-on-year growth of 1.8%, thereby reversing June’s 4.3% decline—this performance also exceeded market expectations

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August further illustrated the momentum with manufacturing output surging by 21%, significantly surpassing July’s growth and the market’s anticipated 8.9% increase, marking the fastest growth for the manufacturing sector since mid-2021.

Analysts suggest that as global demand continues to recover, Singapore’s electronics industry is poised for sustained growth, potentially enduring into the fourth quarter of this year and the first quarter of the nextThe ongoing recovery in the electronics industry, alongside strong external demand, is expected to bolster manufacturing output in the upcoming months, with projections indicating a potential annual growth rate exceeding 1.5%.

In addition, a report from the Singapore Institute of Purchasing and Materials Management revealed that the Purchasing Managers' Index (PMI) for the manufacturing sector reached 51.0 in September, reflecting a minor increase of 0.1 points and indicating that manufacturing activity has remained in expansion territory for the thirteenth consecutive month, achieving its highest value since July 2021. Cai Han-Ting, an economist from DBS Bank Singapore, noted that compared to other regional exporters, Singapore’s PMI performance is relatively solid, suggesting a positive outlook for the manufacturing industry as the remainder of 2024 unfolds.

The strong rebound in non-oil domestic export values has also played a crucial role in driving Singapore’s rapid economic growth in the third quarter

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In July, the non-oil domestic export value broke a five-month decline, recovering with a remarkable increase of 15.7%—this recovery not only rebuffed the 8.8% drop recorded in June but also marked the first expansion since January of this yearAugust saw continued growth, though slightly reduced, with a 10.7% increaseIn September, although the increase persisted, it moderated to just 2.7% year-on-year, falling short of August’s growth rateNonetheless, this marked three consecutive months of positive growth in non-oil domestic exports.

Conversely, the service sector's performance revealed a year-on-year growth of only 3.3% in the third quarter, lagging behind the growth rates recorded in the first and second quartersSpecifically, wholesale and retail trade, along with transportation and warehousing, is projected to have grown by 3.5%, a decline from the previous quarter's 3.9% growth

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The construction industry experienced a similar dip, growing by 3.1%, down from 4.8% in the second quarterOther services such as information communication, finance and insurance, and professional services are expected to have seen a 4.3% growth, following a similarly slow trajectory.

As of October 17, official statistics reported quarterly GDP growth rates of 3.0% for the first quarter, 2.9% for the second quarter, and an impressive 4.1% for the third quarterAnalyzing various domestic and international influences on economic growth, it seems likely that barring any unforeseen events, Singapore could witness an overall GDP growth surpassing 3% for the year.

Considering that Singapore’s economic performance has consistently exceeded expectations throughout the first three quarters of the year—with an average growth rate of 3.3%—and optimistic external demand that is anticipated to continue stimulating manufacturing output growth, several economic analysts have revised their forecasts for Singapore’s overall annual economic growth from 3% to 3.5%, which surpasses the Ministry of Trade and Industry’s anticipated growth range of 2% to 3% for the year.

The Monetary Authority of Singapore has signaled that economic momentum is on the rise, indicating expectations for real growth to further align with potential levels by the second half of 2024. They assert that unless there is a substantial decline in global demand, Singapore’s economy should maintain a steady growth trajectory, approaching potential growth levels by 2025.

However, it is crucial to acknowledge that persistent geopolitical tensions, an increasingly complex global economic landscape, uncertainties surrounding external consumer demand, fluctuations in domestic manufacturing and non-oil export values, rising corporate operational costs, and high living expenses could still cast a shadow on Singapore’s economic growth prospects.