Thanks to the latest growth figures, Singapore narrowly avoided a technical recession in the third quarter of 2019.

A technical recession is defined as two straight quarters of quarter-on-quarter contraction.

Singapore's economy grew for the third quarter

According to advance estimates by the Ministry of Trade and Industry (MTI) on Oct. 14, Singapore's economy grew by 0.1 percent in the third quarter of 2019, on a year-on-year basis.

This meant that the economy grew by 0.1 percent as compared to the July-to-September period last year, according to Business Times.

MTI highlighted that this was the same pace of growth as the second quarter of 2019.

Looking at things on a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 0.6 percent.

The figures were released by MTI on Oct. 14.

Manufacturing sector continued to contract

The manufacturing sector continued to contract, at 3.5 percent for the third quarter compared to 3.3 percent for the second quarter, over an annual period (refer to table above).

MTI explained that this was the result of output declines in the electronics, precision engineering and transport engineering clusters.

However, there was good news in the form of output expansions in the chemicals, biomedical manufacturing and general manufacturing clusters, although not enough to display growth.

Meanwhile, the same period also saw both the construction and services sector grow by 2.7 and 0.9 percent respectively.

MTI said that the expansion of the construction sector was supported by a pickup in both public and private sector construction activities.

Rate of contraction on a quarter-by-quarter basis has slowed

On a quarter-by-quarter basis, the manufacturing sector contracted by 0.4 percent, which is a smaller reduction than the 4.2 percent contraction of the previous quarter.

Meanwhile, the construction sector contracted by 1.1 percent, again smaller when compared to the 5.3 percent contraction from the previous quarter.

The services sector, on the other hand, expanded by 0.7 percent, marking a reversal from the previous quarter's contraction of 1.4 percent.

The growth of the services sector was largely supported by finance, insurance, business services, as well as other service industries:

• Education
• Health and social services
• Public administration and defence
• Arts, entertainment and recreation

However, the MTI also noted that trade-related services, such as wholesale trade, had been affected by weak external demand, and negative spillovers from the downturn.

Economy still expected to grow but at a reduced rate

Separately, the Monetary Authority of Singapore (MAS) stated that it was reducing slightly the rate of appreciation of the Singapore dollar, amid low inflation and growth, CNAreported.

The central bank said: "This measured adjustment to the policy stance is consistent with medium-term price stability, given the current economic outlook."

It added that it expected Singapore's GDP growth to pick up in 2020, although output will still remain below potential.

The sentiment of a weak economy was also echoed by economist at research firm Capital Economics, Alex Holmes.

According to Financial Times, he said: "While fiscal and monetary loosening should help, external headwinds from the US-China trade war and slowing global growth are likely to weigh heavily on growth prospects."

Top photo by jjcb via Flickr