Singapore: Growth plummets in the second quarter
July 14, 2011
According to advance estimates released on 14 July by the Ministry of Trade and Industry (MTI), GDP grew a paltry 0.5% in the second quarter over the same period last year. The reading marked a significant deterioration compared to a revised 9.3% expansion observed in the previous quarter (previously reported: +8.3% year-on-year), but was broadly in line with market expectations, which had growth decelerating to 1.0%. In seasonally adjusted annualised terms, the economy posted an outright contraction of 7.8%, which contrasted the strong 27.2% expansion seen in the first quarter. The deterioration was broad-based, as growth in all main sectors ? construction, manufacturing, and services ? slowed compared to the first quarter. However, the most important driver behind the dismal first quarter performance was a contraction in manufacturing activity, which decreased 5.5% over the same period last year, thus contrasting the 16.4% increase recorded in the first quarter. According to the MTI, the drop ?largely reflected a decline in the biomedical manufacturing cluster, as some companies switched to producing a different value-mix of active pharmaceutical ingredients during the quarter.? Meanwhile, the services sector grew 3.3% (Q1: +7.6% yoy) and construction expanded 1.6% (Q1: +2.4% yoy). The advance estimates for the second quarter include data up until May, and thus may over-estimate the negative effects of the Japanese earthquake. Final numbers will be released on 19 August.