The Singapore economy is expected to expand at a modest pace for the remainder of this year and into 2014, despite recent market turbulence, the city-state’s financial regulatory and monetary authority said yesterday.

Preliminary figures suggest the jurisdiction’s gross domestic product shrank by 1 per cent in the third quarter after a 16.9 per cent surge in the previous three months, according to a report by the Monetary Authority of Singapore.

“Following the strong performance in Q2 2013, economic activity contracted sequentially in Q3 but should resume an expansion trend in the quarters ahead.  Headline and core inflation have stayed low in recent months,” the MAS said in a statement.

In the third quarter of 2013, the financial services sector shrank as equity and foreign exchange market activities fell on concerns over a reduction in the pace of asset purchases by the US Federal Reserve and the threat of military intervention in Syria, the MAS continued.  The manufacturing sector also posed a drag on GDP growth, with overall industrial production declining sequentially in July and August 2013 due to weakness in the electronics and pharmaceutical industries.

“Incoming data suggests that the recovery in the global economy is continuing, although there remain uncertainties, including those associated with the recurring fiscal impasse in the US and potentially disorderly market adjustments to the Fed’s tapering [reduction] of asset purchases,” it said.

“Most other Asian economies have thus far withstood the recent bouts of financial market volatility and the tightening of financial conditions, and are taking policy measures to sustain growth.  Meanwhile, the upturn in global GDP growth will buttress the incipient recovery of the global IT industry in 2014,” it said.

The MAS said overall GDP growth is expected to fall in a range between 2.5 per cent to 3.5 per cent this year, and unlikely to change a great deal in 2014.