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Singapore’s economy grows slightly more than expected in Q2

Published 07/13/2023, 08:48 PM
© Reuters

Investing.com -- Singapore’s economy grew slightly more than expected in the second quarter, data showed on Friday, as resilience in construction activity and the service industry helped offset a sharp decline in manufacturing.

Gross domestic product (GDP) grew an annualized 0.7% in the three months to June 30, advance estimates from the Ministry of Trade and Industry showed. The figure was more than expectations for a rise of 0.6%, and higher than the 0.4% growth seen in the first quarter.

GDP grew 0.3% from the prior quarter, with the city-state dodging a technical recession after GDP shrank 0.4% quarter-on-quarter in the first three months of 2023.

Local construction activity grew 6.6% and was one of the key supports to the economy, while demand for retail trade, IT services, and accommodation and food services also helped buoy economic growth.

An increase in tourism, as China reopened its borders, also supported growth, as international arrivals recovered sharply through the quarter.

But Singapore’s key manufacturing and export sector was hit hard by slowing demand, particularly in major trading partner China. The manufacturing sector shrank 7.5% year-on-year in the second quarter.

Advance GDP estimates are based on the first two months of the quarter, with a fuller reading due in August.

Singapore expects GDP to grow between 0.5% and 2.5% in 2023, after the economy grew a slower-than-expected 2.1% in 2022.

The country’s key non-oil exports shrank drastically over the past year, and are expected to remain under pressure over the coming months. An economic recovery in China was also seen running out of steam during the second quarter, which is a trend that heralds continued pressure on the Singaporean economy.

But China is also expected to roll out more stimulus measures in the coming months, which could spur a local economic recovery that spills over into Southeast Asia.

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