Singapore’s Economy Slowed the Most, Falling by 1.9ppt in 3Q18

The latest release of Asean-5’s real GDP growth tilted to the downside in 3Q18, dragged by weak trade performance, possibly starting to feel the impact from the escalation of trade war between US and China, which resulted in some disruption in trade channels. In the latest economic outlook published by OECD, it projected a more subdued global growth outlook, lowering the 2019 global GDP growth by 0.2 percentage point to 3.5% (from 3.7%). The OECD cautioned lingering slow growth momentum due to some spillover effect of China’s economic slowdown through trade channels and less supportive policies, as well as rising risk in political and geopolitical.

In 3Q18, real GDP growth of Philippines, Thailand, Indonesia, Malaysia, and Singapore all registered slower growth and lower than market expectations. Among these five countries, Philippines remains the fastest growing nation, with real GDP growth expanded by 6.1% yoy in 3Q18, followed by Indonesia (5.2%), Malaysia (4.4%), Thailand (3.3%) and Singapore (2.2%).

In particular, Thailand’s real GDP growth, which slowed to 3.3% yoy in 3Q18, was sharply lower than market expectations of a 4.2% increase. This was due to the sharp contraction in net exports, where net exports declined by 65.2% yoy in 3Q18, its lowest growth since 2Q14. In September, Thailand’s exports to China contracted sharply by 14.1% yoy. However, Thailand’s economy continued to be supported by healthy domestic demand, which rose from 3.9% yoy in 2Q18 to 4.2% in 3Q18. This was driven by private consumption, which grew by 5% during the quarter (4.5% yoy in 2Q18), on the back of strong demand for both durable and semi-durable goods, as well as positive overall income conditions.

Going forward, the Thailand’s National Economic and Social Development Board (NESDB) expects the country’s 2018 full-year growth to be at 4.2%, the lower bound of the projection range of 4.2-4.7%. For 2019, NESDB expects the country’s GDP growth to be in a range of 3.5-4.5%, due to slower than expected recovery in tourism sector, as well as softer global growth.

Separately, in Singapore, real GDP growth expanded at an annualized pace of 3% qoq in 3Q18, better than 1% increase in 2Q18. On a yoy basis, the country’s economy slowed the most, with GDP growth of 2.2% yoy in 3Q18 (4.1% in 2Q18), lower than earlier projection of 2.6%. However, with 9M18 GDP growth at 3.6% yoy, the country’s Ministry of Trade and Industry (MTI) had revised higher 2018 growth to 3.0-3.5%, from 2.5-3.5% previously. In 2019, weaker growth is projected by MTI, in a range of 1.5-3.5%, in a view of trade war tension, and faster-than-expected tightening of global financial condition that may lead to disorderly capital outflow from emerging markets.

Source: Affin Hwang Research - 23 Nov 2018