Singapore third-quarter GDP growth blows past forecasts as manufacturing jumps

By Masayuki Kitano and Fathin Ungku

SINGAPORE (Reuters) - Singapore's economy grew much faster than initially thought in the third quarter, revised official data showed, prompting the government to upgrade its full year 2017 growth forecast as robust global demand boosted the city state's manufacturers.

Gross domestic product grew 8.8 percent in July-September from the previous quarter on an annualised and seasonally adjusted basis, the Ministry of Trade and Industry (MTI) said in a statement on Thursday.

The government's initial estimate, released on Oct. 13, showed the economy grew 6.3 percent, and economists in a Reuters poll had expected that figure to be revised up to 7.4 percent.

The data showed the lift to growth came from a broad expansion in manufacturing activity, up a sharp 34.6 percent on the quarter, compared to 4.0 percent growth in the second quarter.

Singapore and other trade-reliant economies in Asia have enjoyed a boost this year from an improvement in global demand, particularly for electronics products and components such as semiconductors.

Indeed, annual third-quarter growth for other Southeast Asian peers including Thailand, the Philippines and Malaysia beat expectations.

Against a backdrop of improving economic growth, Singapore's central bank held monetary policy steady in October but changed a reference to maintaining current settings for an extended period, a shift that analysts said created room for a tightening next year.

"The forecast for core and headline CPI are unchanged. Accordingly, the monetary policy stance announced in October remains appropriate," said Jacqueline Loh, deputy managing director at the Monetary Authority of Singapore, at the media briefing.

Some economists are taking a cautious view of the outlook.

"It looks like growth is coming mainly out of the manufacturing sector, which is no big surprise. We think the broader economy is still quite weak," said Brian Tan, an economist for Nomura.

The data showed GDP expanded by 5.2 percent in the third quarter from a year earlier versus economists' forecast of 5.0 percent growth. Initial estimate showed growth of 4.6 percent.

The MTI revised up its GDP growth forecast for the whole of 2017 to 3.0 to 3.5 percent, from the previous projection 2.0 to 3.0 percent gains. Growth in 2018 is expected to be 1.5 to 3.5 percent, the MTI said.

In a positive sign for the city state economy's prospects in the fourth quarter, data released last week showed that exports rose the most in 2-1/2 years in October, buoyed by surging sales to China.

(Reporting by Masayuki Kitano and Fathin Ungku; Additional reporting by John Geddie; Editing by Shri Navaratnam)