Q2 GDP up 2.2% but experts forecast tough times ahead
IT HAS been painfully slow going for Singapore's economy but it still managed to eke out a middling performance in the second quarter.
But economists were unimpressed, citing broad weakness across the various cogs of the economy and warning the outlook remains bleak for the rest of the year.
The economy grew 2.2 per cent, in line with economists' expectations, from April to June, according to Ministry of Trade and Industry data out yesterday. The advance estimates reflect only April and May. Final data will be out next month.
Manufacturing, making up a fifth of the economy, was once again the biggest drag on growth. Factory output ticked up just 0.8 per cent.
While this was the sector's first positive year-on-year growth in at least five quarters, DBS economist Irvin Seah said momentum has slowed dramatically and the outlook is far from rosy.
Other sectors fared only slightly better. Construction grew 2.7 per cent, down from 4.5 per cent due to weaker private sector activity.
The service industry rose 1.7 per cent, the same as in the previous quarter.
There were other bright spots with first-quarter economic growth raised to 2.1 per cent from 1.8 per cent, owing to an upward revision in services output.
But Mr Seah pointed out that "this is still weak growth".
"It shouldn't come as a surprise given the difficult economic conditions and challenging global environment," he added, citing China's slowing growth and Europe's uncertainty after the Brexit vote.
Citi economist Kit Wei Zheng said the data paint a "downbeat picture of broad- based economic stagnation" in the first half of this year.
Allen Ang, group managing director of Aldon Technologies, expects sales to pick up in this half of the year.
"Previously, my customers had been utilising about 65 to 75 per cent of their production facilities so there was spare capacity," said Mr Ang, whose firm refurbishes parts for flat panel and semiconductor producers.
"Since April, they've started receiving more orders... so more orders are flowing in to us now."