SINGAPORE (Reuters) - Singapore on Thursday raised its full-year growth forecast for 2013 to between 3.5 and 4.0 percent as third-quarter GDP numbers exceeded prior estimates, helped by further signs of a recovery in manufacturing and continued strength in services.
The wealthy Southeast Asian city-state, which narrowly dodged a recession last year amid flagging demand for its exports, began a turnaround in the second quarter as manufacturing recovered and trade-related services boomed.
The government now expects the economy to grow by as much as 4 percent this year, better than the earlier forecast of 2.5 to 3.5 percent and last year’s 1.3 percent.
“Externally-oriented sectors such as manufacturing, wholesale trade and transportation & storage are likely to support growth, in line with a slight pickup in the global economy,” the Ministry of Trade and Industry said in a statement.
The upgrade means the economy will have stronger momentum going into 2014, although the medium term outlook will depend on the pace of global growth.
The ministry added that next year’s growth will likely be between 2 and 4 percent, supported by a slow recovery in the United States and euro zone.
Singapore, however, also revised its trade forecasts lower, with total trade now expected to grow by 1-2 percent this year with non-oil domestic exports contracting by 4-5 percent.
“A lot of the manufacturing growth in Singapore this year has been front-loaded already,” said Barclays economist Joey Chew.
“Manufacturing has risen way ahead of exports and so, as exports demand catches up, there might be some softness or sluggishness in manufacturing,” she said.
Singapore earlier on Thursday said its gross domestic product grew 5.7 percent in the third quarter from a year ago, better than the advance estimate of 5.1 percent flagged in October and the median estimate of economists polled by Reuters.
The expansion was led by financial services which grew by 10.5 percent during the quarter from a year ago, followed by wholesale and retail trade which
Manufacturing grew 5.5 percent from a year earlier, improving from 1.3 percent in the second quarter, helped by a rebound in the transport engineering cluster which includes oil rigs and aircraft parts.
On an annualized and seasonally adjusted rate, GDP rose 1.3 percent in the third quarter from the preceding three months, slower than the blistering 17.4 percent achieved in the second quarter.
Still, the quarter-on-quarter figure was better than the advance estimate of a 1.0 percent contraction.
Additional reporting by Anshuman Daga; Editing by Shri Navaratnam