Singapore economy grew 2.4% in Q2


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The Republic’s economy expanded by a faster-than-expected 2.4 per cent in the second quarter of this year from a year ago, amid a slowdown across all sectors, the Ministry of Trade and Industry (MTI) said on Tuesday (Aug 12).

The growth during the April-June period was better than the advance estimate of 2.1 per cent announced last month, and was in line with the 2.4 per cent median estimate of economists polled by Reuters.

On a seasonally adjusted and annualized rate, Singapore’s gross domestic product expanded by 0.1 per cent – performing better than the earlier estimate of a 0.8 per cent quarter-on-quarter contraction.

Output from the manufacturing sector rose by 1.5 per cent compared with the same quarter last year, a sharp slowdown from the 9.9 per cent expansion in the preceding quarter. The deceleration in growth was largely due to a contraction in electronics output and slower growth in transport engineering output, MTI said.


However, some economists say they are not overly-concerned. They say the decline was likely due to a one-off factor in the electronics segment, and that recent statistics are pointing to improvement. The latest Purchasing Managers’ Index reading for July showed the manufacturing sector expanding at its fastest rate in a year.

Mr Vishnu Varathan, a Senior Economist with Mizuho Bank, said: “Going forward, the momentum looks to be more positive than it is likely to surprise on the downside. We think that the manufacturing sector will continue to gain traction albeit with soft patches along the way. We’re hoping that with the global recovery taking shape led by the US, there will be more IT renewals coming through and that could add some value to the manufacturing sector, particularly in the higher end semiconductors.”

As for the construction sector, it grew at a slower pace of 4.4 per cent year-on-year in the second quarter, compared with the 6.4 per cent growth in the previous quarter. The slowdown was mainly due to a fall in private construction output, reflecting weaker private residential building works and a decline in private commercial and industrial building works.

Meanwhile, the financial and insurance sector grew 5.5 per cent year-on-year, largely similar to the 5.7 per cent growth in the first quarter, while the wholesale and retail trade sector expanded by 1.7 per cent, slower than the 3.8 per cent expansion in the previous quarter.


Prime Minister Lee Hsien Loong said in his National Day address last week the Singapore economy grew by 3.5 per cent in the first half of this year, and that the official growth forecast for 2014 has been narrowed to between 2.5 and 3.5 per cent, from the earlier projection of 2 to 4 per cent.

Looking ahead, MTI said externally-oriented sectors such as finance and insurance and wholesale trade are likely to support growth in the second half of the year, in tandem with the modest pick-up in the global economy.

“Domestically-oriented sectors such as business services and information and communications are also expected to remain resilient in the second half of 2014,” it added.

MTI, however, said growth in some labour-intensive segments such as retail and food services may be weighed down by labour constraints.

That said, the ministry says Singapore’s economy remains competitive and that restructuring efforts should continue. “Net firm formation is 8,800 in second quarter of 2014, which is higher than the average quarterly net firm formation in 2013, which stood at about 5,000-plus. EDB continues to be able to bring in investments. All these are indicators we think that point to over the long term and overall, we need to persist at restructuring,” said MTI Permanent Secretary Ow Foong Pheng.

Beyond domestic restructuring constraints, some economists say the improving global outlook will help provide a lift to Singapore, despite some uncertainty in the horizon.

“In the second quarter, the US economy did register a rebound in growth, but if you average out the first and second quarter growth, the pace of growth is really sluggish. We’ve seen some slowdown in growth in the Eurozone. And finally, in China, although we’ve seen soft landing, the pace of growth this year will definitely be slower than in previous years,” said Mr Irvin Seah, Senior Economist at DBS Bank.

Still, the latest Markit PMI numbers showed that global growth hit a 3.5-year high in July, with developed economies seeing the fastest expansion since 2007. 



Source : Channel News Asia | August 12, 2014

Thomas D’Innocenzi


About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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