2012 GDP growth forecast shrinks to 'about 1.5%'

It's time for some bad news.

According to CIMB, revised GDP data shows a sharper contraction of 5.9% qoq SAAR for 3Q12 (advance estimate: -1.5%) or +0.3% yoy (previously +1.3%).

Here's more from CIMB:

Less confident of growth prospects, the government has narrowed its 2012 GDP-growth forecast to “about 1.5%” from 1.5-2.5%.

It projects 1-3% growth for 2013, citing an uncertain global outlook.

Revised data released early morning shows the economy contracting a larger 5.9% qoq seasonally-adjusted annualised rate (SAAR) in 3Q12, well ahead of consensus and our forecasts of -2.9% and -2.4%.

Yoy, the economy barely eked out 0.3% growth vs. consensus and our forecasts of 0.9% and 1.1% respectively. 2Q12 GDP growth has been revised higher, to +0.5% qoq SAAR or +2.5% yoy from +0.2% qoq and +2.3% yoy.

There was no growth or lower growth for the key segments. The goods sector declined 10.2% qoq SAAR, the most since 2Q11’s -15.6% while the service sector contracted 3.5% vs. an advance estimate of 0.1% growth.

Within the goods sector, manufacturing and construction contracted 9.6% and 17.2% qoq SAAR respectively (from advance estimates of -3.9% and -7.5% respectively; 0% and 19.4% in 2Q12).

Yoy, goods-sector growth eased to 0.2% from 2Q12’s 5.4% with manufacturing declining 0.8% vs. an advance estimate of +0.7%.

Within services, the main drag was wholesale and retail trade, which declined 7.8% qoq SAAR (2Q12: -0.4%). The finance sector contracted 4.6% qoq SAAR in 3Q12 (+2.9% in 2Q12).

Overall, 3Q12’s GDP growth of 0.3% yoy was the slowest since 2Q09 when the global economy emerged from the Lehman-induced global recession.

The turmoil in Europe continues to threaten the global economy while it is far from certain that the US is back on its feet for sustainable growth. The silver lining is that Asia’s growth may have stabilised now that China, the region’s bedrock, may grow in a steadier manner in 2013 and beyond.

Nonetheless, the region remains susceptible to Europe and the US via financial and trade linkages.

This explains the government’s caution on Singapore. The government has cut its 2012 GDP growth forecast to “about 1.5%” from 1.5-2.5%. It projects 1-3% growth for 2013, citing an uncertain global outlook.

Likewise, we are lowering our 2012 GDP forecast of 1.5-2% to 1-1.5% and 2013 forecast to 2-3% from 3-5%. Despite rising risk aversion, we are comforted by the general calmness in global inter-bank markets, supported by global central banks. This should limit financial-linkage disruptions in the region.