Singapore avoided a technical recession by a razor-thin margin in the July to September quarter - but it is too early to be sighing in relief.
The data released yesterday hardly paints a picture of an economy on the road to recovery. In fact, it is likely that growth will remain slow for some time and the risk of a technical recession - or even a real full-blown one - still lingers.
The economy grew 1.4 per cent in the three months to September over the same period a year earlier, according to advance estimates released yesterday by the Ministry of Trade and Industry.
Growth came in at 0.1 per cent compared with the preceding three months, meaning Singapore narrowly averted a widely expected technical recession. This is defined as two straight quarter-on-quarter declines in economic output.
But its too early to pop the champagne, for a few reasons.
One is simply that these numbers are advance estimates, which take into account data from only the first two months of the quarter.
The final statistics due out next month may still reveal a third-quarter technical recession, with the economy dragged down not just by increasingly downbeat global sentiment but also September's hazy conditions.
Second, there does not seem to be any improvement in the economic situation globally, which in fact poses further risks.
The looming hike in United States interest rates - even as the world's largest economy grapples with a sluggish recovery - is a key risk, said DBS economist Irvin Seah.
He said the cloudy euro zone outlook and a slowing China will also continue weighing on the outlook for Singapore.
In its policy statement out yesterday, the Monetary Authority of Singapore also warned that the outlook for the region has dimmed, which means Singapore will continue to face growth headwinds.
Apart from the growth numbers, there are already other signs that this is a slowdown that could hurt the man in the street.
The job market, while still tight, has shown signs of weakening this year. The number of people holding jobs in the first six months of this year fell for the first time since the 2009 recession.
From January to June, total employment here saw a net fall of 1,000 workers, excluding maids, weighed down by the manufacturing sector, which shed 11,300 workers. Over the same period last year, total employment grew by 52,200.
However, some economists believe that the situation is not as dire as the numbers seem to show. They noted the poor data - largely attributed to a downturn in the export-dependent manufacturing sector - might not be a sign of a wider structural slowdown.
"A technical recession could still come when final numbers are announced next month, but it's a 'numbers' recession," said Barclays economist Leong Wai Ho.
"Some diseases will just come and go without infecting other parts of the body, and this is one of them."
Hopefully, there will be enough in the system to beat off the sickly gloom, or it will be a while before the economy sees some relief.