Output surprise lifts S'pore Q2 growth
SINGAPORE'S economy unexpectedly expanded last quarter as manufacturing declined less than initially estimated, amid a recovery in advanced countries.
The economy grew 2.4 per cent in the second quarter of this year, above the Government's July estimate of 2.1 per cent, but slower than Q1's growth of 4.8 per cent.
After seasonal adjustments, GDP grew an annualised 0.1 per cent quarter on quarter in Q2. This beat both the flash estimate of a contraction of 0.8 per cent, as well as the consensus market forecast of -0.3 per cent.
"While global growth in the first quarter of the year turned out weaker than expected, recent incoming data suggests that global economic activities are recovering modestly," the Ministry of Trade and Industry (MTI) said.
Externally oriented sectors such as finance, insurance and wholesale trade are likely to support expansion in the second half, it said.
Manufacturing declined 15.2 per cent in the second quarter from the previous three months, compared with a July estimate of a 19.4 per cent contraction. Services rose 4.5 per cent in the same period, while construction gained 0.3 per cent.
Growth in the services sector also moderated to 2.6 per cent from 3.9 per cent in Q1, amid a broad-based slowdown in the industry. This was a notch lower than the earlier estimate of 2.8 per cent.
The ministry reiterated Prime Minister Lee Hsien Loong's Aug 8 forecast for this year's growth of 2.5 per cent to 3.5 per cent.
Separately, the estimate for non-oil domestic exports was cut to a contraction of between 1 per cent and 2 per cent, from an increase of 1 per cent to 3 per cent previously.
MTI said that in the second half of this year, in tandem with the modest pick-up in the global economy, externally oriented sectors such as finance and insurance and wholesale trade are likely to support growth.
The ministry also said that domestically oriented sectors - including business services and information and communications - are expected to "remain resilient" in the second half of the year.
"However, growth in some labour-intensive segments such as retail and food services may be weighed down by labour constraints," added MTI.
Irvin Seah, an economist at DBS, said in a note: "Growth momentum going forward will be tepid. The economy continues to be weighed down by domestic restructuring and external uncertainties. Manufacturing has bottomed but the services sector remains a risk."