Singapore GDP Q2 2017


Singapore: Revised growth estimate increases magnitude of economic rebound in Q2

August 14, 2017

According to revised data released by the Ministry of Trade and Industry on 11 August, Singapore’s GDP expanded a revised 2.2% in Q2 from the previous quarter at a seasonally-adjusted annualized rate (SAAR), improving notably from the preliminary estimate of a 0.4% expansion and reversing Q1’s revised 2.1% contraction (previously reported: -1.9% SAAR). As evidenced in the preliminary estimate, the rebound came mainly on the back of an acceleration in the manufacturing sector and also benefited from turnarounds in the construction and services sectors.

In year-on-year terms, GDP expanded a revised 2.9% in Q2 (previously reported: +2.5% year-on-year), up from Q1’s 2.5% growth. Growth came on the back of a strong expansion in the manufacturing sector, led by growth in the electronics and precision engineering clusters. The expansion in manufacturing, as in the prior quarter, was underpinned by strong external demand for semiconductors and was reflected by encouraging figures for industrial production, which expanded for the eleventh consecutive month in June. Stronger external demand contributed to a slight acceleration in the services sector, benefiting the transportation and storage and business services sub-sectors. On the downside, weakness in both private and public sector construction activities weighed on the negative performance of the construction sector, which continued to contract although at a less sharp rate than in Q1. The sector is still suffering the consequences of the correction in property prices which started after the peak reached in 2013 and is only gradually showing signs of softening.

Going forward, Singapore’s economy should continue to benefit from the ongoing recovery of external demand, but still-weak domestic demand should continue to weigh on domestic-focused sectors. Slow productivity growth and the unresolved weakness in the property market will negatively affect private consumption, although the country’s efficient infrastructure, highly transparent regulatory environment, low tax burden and stable governance make the economy highly dynamic and resilient. Volatile oil prices and rising interest rates in the U.S. pose the main downside risks to the outlook.

The Monetary Authority of Singapore expects GDP to grow at a rate of between 2.0% and 3.0% in 2017. FocusEconomics Consensus Forecast panelists project that the economy will expand 2.4% in 2017, which is unchanged from last month’s forecast. For 2018, the panel expects growth to accelerate slightly to 2.3%.

Author: Massimo Bassetti, Economist

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