(Bloomberg) -- Singapore’s economic growth accelerated in the second quarter, in signs the city-state’s recovery is gaining momentum as manufacturing rebounded.
Gross domestic product expanded 0.4% in the three months to June from the previous quarter, the Ministry of Trade and Industry said in its advance estimate Friday. That matches the median expectation in a Bloomberg News survey and is quicker than a revised 0.3% gain seen in the January-March period.
Compared with a year ago, the economy expanded 2.9%, beating the survey forecast for a 2.7% increase. The MTI figures were mostly computed from data in the first two months of the second quarter.
Manufacturing halted two quarters of contraction, thanks to a global tech upcycle. Construction also swung into growth in the April-June period, supported by increased public sector projects.
While the latest data puts the city-state on track with hitting a 1%-3% GDP growth target for 2024, a lot still depends on a durable recovery in global trade in light of continued geopolitical tensions. Easing price pressures also offers relief, suggesting that financial conditions won’t have to be tightened further when the Monetary Authority of Singapore makes its policy decision later this month.
Exports in the trade-reliant economy remain sluggish though, contracting in four of the five past months to May. They are forecast to expand by 1.4% in June.
The benchmark Straits Times Index rose 0.7%, on track for its highest close since May 2018. The Singapore dollar was little changed against the US dollar at 1.3439.
The accommodation, food and real estate cluster posted a 0.5 decline in the second quarter, causing the broader services sector to flatline.
That was due to the surge in the first quarter following performances by big names like Taylor Swift and Coldplay, according to Oversea-Chinese Banking Corp. The Formula 1 race this quarter should herald a recovery in services. OCBC and Oxford Economics revised their 2024 GDP growth estimates higher after the latest data.
What Bloomberg Economics Says...
The pickup in Singapore’s second-quarter growth gives the Monetary Authority reason to keep its policy settings tight at this month’s meeting. The central bank’s projection for growth to strengthen over the course of this year looks secure, which would mean sustained demand-pull pressures.
—Tamara Mast Henderson, Asean economist
For the full note, click here
Other details from Friday’s release:
- Manufacturing grew 0.6% in the second quarter from prior three months, while rising 0.5% on year-on-year terms. That reverses a sequential contraction of 5.3% in the January-March period and a 1.7% contraction from a year ago
- Construction rose 2.4% quarter-on-quarter, and increased 4.3% from a year ago
- Year-on-year, services producing industries gained 3.3%, supported by sustained tourism recovery
--With assistance from Cynthia Li and Shinjini Datta.
(Updates with more details from fourth paragraph.)
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