SINGAPORE will probably grow just 1.5 per cent this year, or less, after the economy did far worse than earlier thought in Q3.
The Ministry of Trade and Industry (MTI) yesterday said that the growth, sliding to the bottom of its previous 1.5-2.5 per cent forecast range, may even slip under 1.5 per cent if weakness in the externally oriented sectors persists in the current quarter.
Many private-sector economists yesterday cut their own 2012 growth forecasts too, shocked by the sharp downgrade to Q3 GDP advance estimates and unconvinced that the rebound in October's non-oil domestic exports - also announced yesterday - can be sustained through Q4.
Last quarter, the economy shrank a seasonally adjusted, annualised 5.9 per cent - more than three times the advance estimate of a 1.5 per cent quarter-on-quarter contraction.
Year-on-year growth of 0.3 per cent, too, fell short of both the 1.3 per cent advance estimate and the 0.9 per cent market consensus formed after weak September trade and production figures hinted at a downgrade.
With this came fresh talk of a technical recession - which Singapore escaped thanks to revised sequential growth of 0.5 per cent in Q2 GDP. But this was dismissed by other economists who say a 1.5 per cent growth forecast for the year assumes modest acceleration in Q4.
Citi economist Kit Wei Zheng, who slashed his 2012 forecast from 2.3 per cent to 1.4 per cent, thinks that the composite leading indicator, business expectations survey for biomedical manufacturers and the purchasing managers' index are "all pointing to a mild technical recession in Q4"
But Mizuho Corporate Bank economist Vishnu Varathan sees signs of exports growth bottoming in bellwether economies such as South Korea, Taiwan and China, and believes growth may pick up more strongly in the current quarter to yield full-year growth of 1.7 to 1.8 per cent.
Even then, he said: "Sustained pick-up in exports and manufacturing will probably help avert a technical recession, but that is a hollow consolation."
After all, the government is projecting no more than a "cautiously positive" 1-3 per cent growth next year, given continued sluggishness in the global economy.
This assumes that the US "fiscal cliff" does not materialise and a gradual fiscal contraction - which MTI thinks is more likely - allows the US economy to grow at a moderate pace next year, MTI permanent secretary Ow Foong Pheng said at a media briefing yesterday.