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Singapore GDP Q2 2018

Singapore: Economy performs well in Q2 despite cooling from Q1, according to an advance estimate

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

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