Singapore’s economy performed better than estimated in the second quarter, but recovery will be “sluggish” on continued weak demand from the US and Europe, the government said yesterday.
The trade-reliant economy expanded by a seasonally adjusted 20.7 percent in the June quarter from the previous three months, better than the estimated growth of 20.4 percent released last month.
The expansion marks Singapore’s first quarter-on-quarter growth in five quarters and analysts said this suggests the economy is emerging from its worst recession since independence 44 years ago. It followed a quarter-on-quarter dive of 12.2 percent in the first three months.
PHOTO: AP
Second quarter performance was underpinned by strong gains in the manufacturing sector, where output climbed 49.5 percent compared with the previous quarter’s contraction of 18.5 percent.
Manufacturing growth was powered by a surge in the production of active pharmaceutical ingredients used in medicines worldwide and a rise in inventory restocking in electronics.
The construction sector grew 32.7 percent on the back of a resilient property market and the ongoing building of two massive casino projects in the city-state, the ministry said.
However, GDP in the three months to June was still down 3.5 percent year on year, indicating that any recovery would be fragile.
In the March quarter GDP shrank 9.5 percent from the same point last year.
The trade ministry noted that industrial production and consumption in Singapore’s key export markets such as the US and Europe are still weak and unemployment remains high.
“Without a turnaround in these demand-led indicators, any economic recovery in the second half of the year will probably be sluggish and modest,” the ministry said.
As a result, the government is maintaining its forecast for the economy to shrink between 4 percent and 6 percent this year.
In a separate statement, the government’s trade promotion body International Enterprise Singapore (IE Singapore) said key exports rose a seasonally adjusted 7.6 percent in the June quarter from the previous three months.
But compared with the previous year, non-oil domestic exports fell by 14 percent on lower shipments of electronics and non-electronic goods, it said.
Total external trade was up 3.8 percent from the preceding quarter but down 27 percent from a year earlier.
“For the remainder of 2009, external conditions are expected to stay weak,” IE Singapore said.
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