Third-quarter gross domestic product (GDP) on tap this week may unveil a foggy economic outlook for Singapore, mirroring the hazy skies that have shrouded the Southeast Asian island-state for the past month due to seasonal pollution from the burning of Indonesia's forests and land.
Advance estimates for the July-September quarter, scheduled for release at 8am local time on Wednesday, are expected to show the economy growing 1.3 percent on-year, according to a Reuters poll.
However, on a quarter-on-quarter basis, the economy likely shrank 0.1 percent from the previous three months on an annualized and seasonally adjusted basis, the Reuters poll said, following a 4.0 percent contraction in the April-June quarter.
This would put Singapore in a technical recession, which is commonly defined as two successive quarters in which the economy contracts from the previous quarter.
Singapore's economy last went through a recession in 2008 when a slowdown in U.S. and European consumer demand hit the country's crucial manufacturing sector.
This time round, a confluence of factors such as erratic global demand led by a slower-growing China – a major market for Singapore – and domestic issues such as a tight labor market are among the culprits dampening the outlook of the affluent city-state.
Industrial output declined more than expected in July and August, while the all-items consumer price index fell for the 10th consecutive month in August to a post-global financial crisis low.
Meanwhile, the all-important exports sector is likely to stay in the doldrums. September non-oil domestic exports (NODX) due on Friday, likely fell 3.6 percent on-year, said economists polled by Reuters, after an 8.4 percent slide in August and 0.7 percent slip in July.
"Exports and industrial output have slumped hard alongside port activity as a consequence of China wobbles exacerbating global demand deficiency. And while not as dire as externally-focused activity, domestic demand has also been dented by a confluence of softer credit growth, labor supply constraints and broader economic drag from the cooling property market," Vishnu Varathan, senior economist at Mizuho Bank, wrote in a note released Monday.
"With Singapore mired in downturn derived from sustained and broad-based factors rather than quirks of GDP sub-component volatility, any technical recession is not merely fleeting technicality," he added.