Economic growth records fastest upturn since Q3 2022 in the second quarter

GDP growth gained traction to 6.9% year on year in the second quarter, from the upwardly revised 5.9% in the first quarter and marking the strongest growth since Q3 2022. Q2’s result marked the 11th consecutive quarter of expansion and surpassed market expectations.

The industrial sector chiefly drove the improvement, growing 8.3% year on year in Q2 thanks to stronger manufacturing growth (Q1: +6.7% yoy). In addition, momentum in the services sector improved to 7.1% yoy in Q2 from Q1’s 6.2% rise, likely buoyed by strong domestic activity. Rising exports of electronics and seafood also supported the overall improvement. On the flipside, the worst drought in nearly a decade hit the agricultural sector where growth fell to 3.3% yoy in Q2—an over one-year low (Q1: +3.4% yoy).

United Overseas Bank analyst Suan Teck Kin said: “With 2Q24 performance above our and market expectations and setting a positive tone, outlook for 2024 remains bright. However, we caution that second half of this year is likely to see a more muted performance, due to the higher base in 2H23 as well as downside risks that are still present. These include conflicts between Russia and Ukraine and in the Middle East which could disrupt global trade and energy markets. Nonetheless, the recovery in the semiconductor cycle, stable growth in China and the region, and the likely easing of monetary policy by major central banks will be supportive of outlook.”

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