Singapore: Economy performs well in Q2 despite cooling from Q1, according to an advance estimate
July 13, 2018
A preliminary estimate by the Ministry of Trade and Industry released on 13 July showed that in the second quarter the economy grew 1.0% in quarter-on-quarter seasonally-adjusted terms (SAAR), down from a revised 1.5% in Q1 (previously reported: +1.7% quarter-on-quarter). On an annual basis, the economy expanded 3.8%, down from Q1’s revised 4.3% (previously reported: +4.4% year-on-year).
The manufacturing and services sectors drove growth in the quarter. Manufacturing grew a robust 8.6% year-on-year (Q1: +9.7% yoy), led by the electronics and biomedical clusters and supported by strong international trade flows and healthy global growth. The services sector expanded 3.4% (Q1: +4.0% yoy), led by the finance and insurance; and wholesale and retail trade sub-sectors, with retail trade likely aided by a solid labor market. In contrast, the construction sector continued to contract sharply (Q2: -4.4% yoy; Q1: -5.2% yoy), on limp activity in the private sector.
Annual economic growth will likely moderate heading into H2—partly on a less favorable base effect—although the expansion for 2018 overall will still be notable. The manufacturing sector will likely begin to lose some steam on tough year-on-year comparatives, while recently announced measures to cool the property market could further depress the construction sector. However, private and public consumption should partially compensate, supported by a tight labor market, higher wages and a more expansionary fiscal stance. The risk of recent tit-for-tat tariffs turning into a full-blown trade war between the U.S. and China presents the principal downside risk to Singapore’s growth outlook.
Singapore GDP Forecast
The Ministry of Trade and Industry expects an expansion of 2.5–3.5% in 2018. FocusEconomics Consensus Forecast panelists project that the economy will grow 3.2% in 2018 and 2.8% in 2019.
Author: Jan Lammersen, Economist