SG Economy

Economy: Barely averted a technical recession in 3Q
Singapore's GDP grew a better-than-expected 1.4% y/y in 3Q15, easing from 2% growth in 2Q15.

Sequentially, the economy expanded 0.1% q/q, reversing from the 2.5% contraction in the preceding quarter, averting earlier worries of a technical recession, albeit barely.

Separately, the MAS announced that it would ease monetary policy slightly by adjusting the currency band to slow SGD appreciation.

Briefly, the easing would translate into a weaker SGD against USD if the Fed continues its course to raise benchmark rates for the first time since 2006.

This would in turn apply upward pressure on short-term interest rates, casting a bigger drag on the economy in the short term as funding costs get more expensive.

On the bright side, the weaker SGD would benefit the export sector and stocks which derive a large proportion of its revenue in USD, such as Ezion, Pacific Radiance, SIA, SingTel, ST Engineering and Venture.