SINGAPORE: Singapore's economy probably contracted in the third quarter due to weak global demand for its manufacturing exports, reinforcing expectations of policy easing by the central bank on Friday.
But the city-state may avoid becoming the first major Asian economy to fall into a technical recession this year as Prime Minister Lee Hsien Loong has said second-quarter data could be revised upwards.
Recessions are typically defined as two quarters of sequential decline in gross domestic product.
According to the median estimate of 16 economists polled by Reuters, Singapore's GDP likely shrank a seasonally adjusted and annualised 1. 0 p ercent qu arter-on-quarter in July-September, worsening from the 0.7 percent drop that had been reported for April-June.
From a year ago, the economy probably grew by 1.2 percent , slower than the second quarter's 2.0 percent expansion, reflecting the impact of the slowdown in the big export markets of Europe, United States and China on the trade-reliant city-state.
Advance estimates for third quarter GDP will be released at 8:00 a.m. local time (0000 GMT) on Friday, at the same time the Monetary Authority of Singapore (MAS), the city-state's central bank, issues its half-year monetary policy statement.
The central bank is expected to ease monetary policy by slowing the Singapore dollar's pace of appreciation to help manufacturers fight the weakness abroad. The local unit has gained 5.4 p e r cent this year, making the country's exports costlier.
Bank of America Merrill Lynch's Southeast Asian economist Chua Hak Bin said in a note that the downturn in Singapore appeared mild and was "largely a manufacturing recession".
Construction likely remained healthy in the third quarter while services growth was slightly positive, he added.
Chua told Reuters on Tuesday that he is sticking to his forecast that MAS will loosen monetary policy slightly.
Singapore's manufacturing sector contracted for a third consecutive month in September as new orders fell further, the country's Purchasing Managers' index (PMI) showed, in line with other export-driven Asian economies facing tepid demand in Europe and the United States.
The drop in the September PMI reading followed weak manufacturing and exports data for July and August that were worse than expected.
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