Asia-Pacific News

Singapore economic growth accelerates in second quarter, beating forecasts

Key Points
  • Singapore's economic growth accelerated in the second quarter, with gross domestic product rising 2.9 percent on-year, beating forecasts
Leslie Shaffer

Singapore's economic growth accelerated in the second quarter, with its gross domestic product rising 2.9 percent on-year, beating a Reuters poll forecast for 2.6 percent growth.

Quarter-on-quarter, the economy expanded by 2.2 percent on a seasonally-adjusted annualized basis, compared with a Reuters poll forecast for just 0.5 percent growth.

Manufacturing was a key driver of the growth, rising 8.1 percent on-year in the quarter.

That was supported by the electronics and precision engineering sectors amid strong global demand for semiconductors and semiconductor-related equipment, according to a statement from Singapore's Ministry of Trade and Industry.

Services sectors also expanded, with the finance and insurance sector growing 3.8 percent on-year, the business services sector up 1.8 percent on-year and the "other services industries" segment increasing 3.1 percent on-year, supported by education, health and entertainment.

The forecast-beating outcome came despite contractions in the biomedical manufacturing, construction and accommodation and food services sectors.

Singapore's MTI changed its GDP forecast range for the full year to 2 percent to 3 percent, from 1 percent to 3 percent.

Gareth Leather, senior Asia economist at Capital Economics, was generally positive on the figures.

"Today's revised estimate of Singapore's second quarter GDP suggests the economy is in better shape shape than previously thought," he said in a note on Friday. "Looking ahead, although rising interest rates will remain a drag on demand, the healthy outlook for exports means growth should remain relatively strong."

But while he was positive on the export outlook, he added that the rest of the economy was "less promising," as higher interest rates could pose problems for heavily indebted households.

Capital Economics forecasts economic growth of around 3.0 percent this year for the city-state.

A separate data release on Friday showed Singapore's closely watched non-oil domestic exports (NODX) rose 2.7 percent on-year in the second quarter, slowing from the first quarter's 15.3 percent growth.

A 13.3 percent increase in shipments of electronics products offset a 1.1 percent decrease in non-electronic exports, International Enterprise Singapore said in a statement.