SINGAPORE, Nov 23 — Singapore’s economy grew at its quickest pace in nearly four years in the third quarter, thanks to a boom in manufacturing that some analysts say will encourage tighter monetary policy in 2018.

Today’s revised official numbers beat the market’s already buoyant expectations, and prompted the government to upgrade its full year 2017 growth estimate to 3.0 to 3.5 per cent on the back of improved global demand.

Gross domestic product expanded by 5.2 per cent in July-September from a year earlier versus economists’ forecast of 5.0 per cent growth, the Ministry of Trade and Industry (MTI) said in a statement.

An initial estimate showed growth of 4.6 per cent.

It marked the strongest year-on-year growth since the fourth quarter of 2013 and firmed some economists’ expectations for monetary tightening as soon as the central bank’s next meeting in April.

"Singapore’s strong growth recovery reflects regional trends of trade-exposed countries...capitalising on the rise of global demand to boost growth,” said Trinh Nguyen, senior economist for Natixis in Hong Kong.

Nguyen expects the robust growth will probably allow the Monetary Authority of Singapore (MAS) to tighten its exchange-rate based policy in April.

Indeed, at its October review, MAS changed a reference to maintaining current settings for an extended period in a sign it could tighten next year.

On an annualised and seasonally adjusted basis, the economy grew 8.8 per cent from the previous quarter, beating an initial estimate of 6.3 per cent and economists’ forecasts of a revision up to 7.4 per cent.

Not everyone was convinced about a tightening next year and the deputy managing director at the MAS, Jacqueline Loh, gave little away when asked about the implications for policy from today’s data.

"The forecast for core and headline CPI are unchanged. Accordingly, the monetary policy stance announced in October remains appropriate,” she said.

Separate data released today showed that core inflation held steady at 1.5 per cent year-on-year in October, while the closely-watched industrial production data due tomorrow is expected to tick up.

Uneven growth?

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

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

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

Loh Khum Yean, MTI Permanent Secretary told reporters there "remains unevenness between sectors and within sectors,” adding that the construction sector and segments within the manufacturing sector such as transport engineering remain weak.

Nomura’s Brian Tan took a cautious view about the economic and monetary policy outlooks.

"The headline GDP numbers will be lifted up by electronics manufacturing but the real question is what about the rest of the economy?,” said Tan.

"If that doesn’t improve sufficiently by the time we get into next year then it’s very difficult to see them (MAS) tightening policy just yet.” — Reuters