Singapore’s economic growth gained momentum in the second quarter, buoyed by a resurgence in manufacturing activity. According to the Ministry of Trade and Industry’s advance estimate released Friday, gross domestic product expanded by 0.4% from the previous quarter, matching expectations and surpassing the revised 0.3% growth seen in the first quarter of the year.
On a year-on-year basis, Singapore’s economy grew by 2.9%, exceeding the forecasted 2.7% increase. The data, largely based on information from the first two months of the quarter, indicates a notable turnaround in the manufacturing sector, which had experienced two consecutive quarters of contraction. This revival was driven by a global upswing in technology demand. Additionally, the construction sector returned to growth in the April-June period, supported by increased public infrastructure projects.
Looking ahead, Singapore appears on track to achieve its GDP growth target of 1%-3% for 2024, contingent upon sustained global trade recovery amidst ongoing geopolitical uncertainties. The easing of price pressures provides some relief and suggests that the Monetary Authority of Singapore may not need to tighten financial conditions further during its upcoming policy review.
However, exports, critical for Singapore’s trade-dependent economy, have remained sluggish, contracting in four of the past five months up to May. Forecasts indicate a modest 1.4% expansion in June.
Financial markets responded positively to the news, with the benchmark Straits Times Index climbing 0.7%, poised for its highest closing since May 2018. The Singapore dollar showed minimal movement against the US dollar at 1.3439.
In contrast, the services sector faced challenges, particularly in accommodation, food, and real estate, which saw a 0.5% decline in the second quarter, contributing to overall stagnation in the broader services industry. This was partly attributed to exceptionally strong performances in the previous quarter from major events like concerts by global artists.
Looking forward, expectations are optimistic with upcoming events such as the Formula 1 race anticipated to bolster the services sector. Both Oversea-Chinese Banking Corp. and Oxford Economics revised their GDP growth projections upward for 2024 following the latest economic data.
Key details from the release include:
- Manufacturing expanded by 0.6% quarter-on-quarter, reversing previous contractions.
- Construction grew by 2.4% quarter-on-quarter and 4.3% year-on-year.
- Services-producing industries saw a year-on-year growth of 3.3%, supported by ongoing recovery in tourism.
The improved second-quarter growth reinforces the Monetary Authority’s stance on maintaining current policy settings to support sustained economic expansion throughout the year.
