GDP growth slows in Q3

Economic growth moderates: A second release confirmed that GDP growth moderated to 5.3% year on year in the third quarter from 5.9% in the second quarter. On a seasonally adjusted quarter-on-quarter basis, GDP rose 1.8% in Q3, following the previous period's 2.9% growth.

Private spending chiefly behind the deceleration: On the domestic front, household consumption growth slowed to 4.8% year on year in Q3 compared to 6.0% in Q2. More positively, government consumption strengthened to a 4.9% rise in the third quarter (Q2: +3.6% yoy). Moreover, fixed investment surged by 15.3% in Q3, following the 11.5% increase recorded in the prior quarter. On the external front, net trade detracted 0.4 percentage points from the overall expansion, contrasting Q2’s 0.1 percentage point contribution. Growth in exports of goods and services reached 11.8% on an annual basis in the third quarter, which was above the second quarter's 8.4% expansion, while imports of goods and services accelerated to 13.5% in Q3 (Q2: +8.7% yoy).

Economy to lose steam in 2025: Looking ahead, our panelists see annual GDP growth ticking up slightly from Q3’s level in Q4 before cooling through the end of 2025. During next year as a whole, the economy will decelerate from 2024’s projected uptick, capped by weaker expansions in both domestic demand and exports. Risks are skewed to the downside and include heightened protectionism under U.S. President-elect Trump and weaker-than-expected tourist inflows.

Panelist insight: United Overseas Bank analysts Julia Goh and Loke Siew Ting commented: “For 2025, we maintain our growth forecast of 4.7%, pending further details on US trade policies and tariffs. Domestic catalysts include expansionary fiscal policy, favorable labor markets, implementation of national masterplans and high impact projects, as well as stable interest rates.”

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