Singapore: Economy accelerates in Q2
July 14, 2016
According to advanced estimates released by the Ministry of Trade and Industry on 14 July, in Q2 GDP grew 0.8% over the previous quarter at a seasonally adjusted annualized rate (SAAR). The reading was healthily above the meagre 0.2% rise recorded in Q1 and matched market expectations. Growth in Q2 was due to the return to growth in the services sector more than offsetting the slowdowns in other sectors. Services had a positive contribution on the overall result, swinging from 4.8% contraction in Q1 to 0.5% growth in Q2. Growth in the services sector was driven mainly by wholesale and retail trade as well as by the transportation and storage. Construction decelerated from a 3.5% increase in Q1 to a 0.6% rise in Q2, mainly on the back of a slowdown in private sector construction activities. Manufacturing grew a modest 0.3%, which represented a sharp slowdown from Q1’s robust 18.4% expansion and was strongly influenced by the temporary increase in pharmaceutical production registered in Q1 having vanished in Q2.
In year-on-year terms, GDP expanded 2.2% in Q2, which was a notch up from Q1’s 2.1% growth (previously reported: 1.8% year-on-year).
As for the future prospects for Singapore’s economy, Weiwen Ng, South and Southeast Asia Economist at ANZ Research, commented: “Singapore continues to be the anomaly of a ‘services’ economy that is under-performing in a services led global trade environment. We do not see that dynamic changing anytime soon, with the economy characterized by headline disinflation and sluggish GDP growth over the forecast profile. Growth in the coming quarters will be constrained by multi-year restructuring domestically and downside risks in her major trading partners, particularly Brexit and waning growth momentum in China. Sluggish global trade would weigh on externally-oriented sectors such as the manufacturing and transportation & storage sectors”.