Singapore’s economy rebounds as forecasted
Singapore’s economy rebounded by 20.7% on an annualised quarter-on-quarter basis, as reported yesterday. Technically, this marks the end of the recession, since a downturn is defined as a continuous period of negative growth lasting for two quarters or more. But as pointed out earlier, much of this boost was provided by pharmaceutical output and electronics inventory restocking, except this time it’s accompanied by spikes in construction and financial services, the latter likely fueled by buoyant stock and credit markets in the second quarter:
Manufacturing output increased by 49.5 per cent, compared to the previous quarter’s contraction of 18.5 per cent. This was largely due to a surge in the production of active pharmaceutical ingredients in the biomedical manufacturing cluster and an increase in inventory restocking in the electronics sector. Momentum in the construction sector also picked up strongly after a moderation in the first quarter. The sector grew by 32.7 per cent compared to the first quarter, driven by the growth in both public and private construction activities.
Financial services also improved in the second quarter, growing by 22.8 per cent compared to the first quarter. This performance provided a lift to the services producing industries as a whole, which grew by 8.7 per cent compared to the 9.8 per cent decline in the previous quarter.
Despite this, the economic news doesn’t appear to have cheered analysts:
The markets gave a muted response to the latest data as many traders and analysts said that the numbers were mostly expected.
“I don’t think the revision in the second-quarter numbers has fundamentally changed anything in terms of the economic outlook for Singapore,” Selena Ling, economist with OCBC said.
This table details the quarter-on-quarter annualised growth rates:
As highlighted above, Singapore owes much of its Q2 boost to manufacturing output, construction and financial services.