Transportation and Storage Industry Faces Significant Decline in Revenues
In Q3 2023, Singapore’s services industries experienced a 3.2% year-on-year increase in business receipts, showing a slowdown from the previous quarter’s revised 3.8%. This marks the fifth consecutive quarter of declining growth, reflecting the ongoing normalization after the post-2022 reopening surge.
The transportation and storage sector reported a sharp 20.7% year-on-year decline, largely due to lower freight rates in the shipping industry, impacting the water transport segment. While the decline is mainly attributed to pricing factors, real output continues to grow at a slower pace.
However, other sectors such as recreation and personal services saw a 20.8% year-on-year growth, driven by increased earnings in sports, gaming, and attractions. The information and communications sector also saw double-digit growth, with higher business receipts in areas like software development and IT consultancy.
Economists are forecasting that Singapore’s services growth will stabilize at the current pace through Q4 2023, with a potential rebound in 2024, driven by strong demand in sectors such as data and cloud services. Notably, finance and insurance returned to positive growth after a period of contraction, and further growth is expected as US interest rates begin to decline in the second half of 2024.
Despite challenges in some areas, recreation, personal services, and education are anticipated to continue their positive momentum, with higher education institutions particularly benefiting from increased fee revenue. On the other hand, real estate services saw weaker growth due to rising mortgage rates and stricter housing measures.
