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RPT-PREVIEW-Singapore likely in recession on expected Q3 GDP drop

(Repeats story issued on Friday, no changes to text)

* WHAT: Advance Q3 GDP data

* WHEN: 8:00 am (0000 GMT), Friday, Oct 12

* FORECAST: -1.8 pct q/q saar, +1.0 pct y/y

SINGAPORE, Oct 5 (Reuters) - Singapore's economy probablycontracted further in the third quarter because of poor demandfor its manufacturing exports, tipping the island into arecession and reinforcing expectations of policy easing by thecentral bank at its meeting next Friday.

Gross domestic product likely shrank by 1.8 percent inJuly-September, worsening from the 0.7 percentquarter-on-quarter seasonally adjusted and annualised drop inApril-June, according to a median estimate of 12 economistspolled by Reuters.

From a year ago, the economy probably grew by 1.0 percent,slower than the second quarter's 2.0 percent expansion,reflecting the impact of the slowdown in the big export marketsof Europe, United States and China on the trade-reliantcity-state.

Advance estimates for third quarter gross domestic productwill be released at 8:00 a.m. local time (0000 GMT) on Friday,at the same time the Monetary Authority of Singapore (MAS)issues its half-year monetary policy statement.

The central bank is expected to ease monetary policy byslowing the Singapore dollar's pace of appreciation to helpmanufacturers fight the weakness abroad. The local unit hasgained 5.6 percent this year, making the country's exportscostlier.

Bank of America Merrill Lynch's Southeast Asian economistChua Hak Bin said in a note that the downturn in Singaporeappeared mild and was "largely a manufacturing recession".

Construction likely remained healthy in the third quarterwhile services growth was slightly positive, he added.

Singapore's manufacturing sector contracted for a thirdconsecutive month in September as new orders fell further, thecountry's Purchasing Managers' index (PMI) showed, in line withother export-driven Asian economies facing tepid demand inEurope and the United States.

The drop in the September PMI reading followed weakmanufacturing and exports data for July and August that wereworse than expected.

DOMESTIC FACTORS

DBS, Southeast Asia's largest banking group, said thatdomestic factors had added to Singapore's loss ofcompetitiveness.

"High COE premiums and rentals, as well as the continuedincrease in labour cost are the key drivers," DBS economistIrvin Seah said in a note.

COEs refer to the certificates of entitlement thatindividuals and companies need to bid for before they can buy amotor vehicle in Singapore, and are used by authorities to capthe number of vehicles on the road.

According to COE prices tracked by sgcarmart.com, the costof a certificate for goods vehicles and buses has jumped 45percent since the start of the year to S$56,001 ($45,600), upfrom S$38,699 in early January.

Singapore has also been making it harder for companies toemploy low-cost foreign workers as its previously laximmigration policy has caused wages at the low end to stagnate.

The government is also facing a backlash by citizens overthe large number of foreigners in the country that has resultedin crowded trains and buses as well as competition for jobs andhousing.

"The tightening in foreign labour inflow in particular, iscreating significant strain on enterprises and erodingSingapore's cost competitiveness," Seah said.

Foreigners now account for 40 percent of the city-state's5.3 million population.

Q3/2012 Median Range Q2/2012 No. of(% change) (actual) estimatesQ/Q SAAR* -1.8 -7.0/-0.1 -0.7 12YOY** +1.0 -0.5/+1.0 +2.0 12

* Seasonally adjusted annualised rate based on quarterly change** percentage change from a year ago

INDIVIDUAL ESTIMATES:q/q saar y/yBarclays -5.5 0.1Bank of America Merrill Lynch -1.7 1.1CIMB -2.0 0.9Citigroup -1.8 0.8Credit Suisse -4.4 0.3DBS -0.1 2.3ING Financial Markets -3.5 0.6Macquarie -7.0 -0.5Maybank -1.0 1.5OCBC -0.3 1.4Standard Chartered -0.4 1.4United Overseas Bank Ltd -0.4 1.2

($1 = 1.2287 Singapore dollars)

(Reporting by Kevin Lim; Editing by Sanjeev Miglani)

((Kevin.Lim@thomsonreuters.com)(65)(6403 5663))

Keywords: SINGAPORE ECONOMY/GDP