Singapore’s economy grew 0.7% year-on-year in the third quarter of 2023, according to flash estimates from the Ministry of Trade and Industry (MTI). This marks an improvement from the 0.5% growth seen in Q2, surpassing private economists’ expectations of 0.4%. On a seasonally adjusted basis, the country’s GDP rose 1%, up from the previous quarter’s 0.1% growth.

The improved performance was driven by a milder-than-expected contraction in the manufacturing sector, which shrank by 5%, down from the 7.7% decline in Q2. The sector grew 0.2% quarter-on-quarter, signaling slight recovery. However, manufacturing still marked its fourth consecutive quarter of contraction, with output declining across all clusters except for transport engineering.

Singapore’s service industries saw growth ease to 1.9% in Q3, down from 2.8% in Q2. Sectors like information and communications, finance, insurance, and professional services expanded 1.5% year-on-year. Meanwhile, the wholesale, retail trade, and transport sectors slowed to 0.6% growth. Accommodation, food services, and other industries, buoyed by a recovery in international tourism, grew 4.7%.

Despite this improvement, economists suggest that the third quarter’s performance is a small sign of progress rather than significant growth, as Singapore continues to contend with external headwinds and a cooling global demand.