Economic growth loses steam in Q3

GDP growth slows but beats market expectations: According to an advance estimate, GDP growth moderated to 5.3% year on year in the third quarter from 5.9% in the second quarter. Nevertheless, the expansion was faster than markets had anticipated and remained robust overall.

Broad-based growth moderation drives Q3’s result: Looking at available data, the agricultural sector grew 4.0% annually in the third quarter, decelerating from the second quarter's 7.2% increase. In addition, the industrial sector lost steam, growing 5.6% in Q3 (Q2:+5.7% yoy): The worst decline in mining and quarrying in three years outweighed stronger manufacturing and construction growth. Lastly, services growth waned to 5.1% in Q3 (Q2: +5.9% yoy).

Both domestic demand and exports to decelerate ahead: In 2025, the economy is set to grow at a softer pace compared to 2024’s projection: Both domestic demand and exports are forecast to decelerate next year, largely capped by still-tight monetary conditions plus an unfavorable external backdrop. Looser-than-expected fiscal spending is an upside risk, while protectionist policies under U.S. President Trump pose a downside risk.

Panelist insight: United Overseas Bank analysts Julia Goh and Loke Siew Ting commented on the outlook: “Going into 2025, a record expansionary budget unveiled for 2025 and the continued implementation of national master plans will keep the economic outlook resilient […]. Higher government cash and minimum wages as well as special cash assistance will underpin private consumption growth next year.”

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