Singapore is expected to show 1.1 percent quarter-on-quarter growth in April-June, averting a recession thanks to an uptick in electronics output as well as a recovery in the services sector, a Reuters poll of economists showed on Monday. The economy had got off to a weak start to the year, suffering a 1.3 percent contraction, on a seasonally adjusted and annualised basis, in January-March compared with the final quarter of 2016.
Year-on-year, second quarter advance gross domestic product (GDP) was forecast to show growth of 2.8 percent in April-May, according to the median estimate of 11 economists surveyed by Reuters, improving slightly on the 2.7 percent growth posted for January-March. The data will be reported on Friday, July 14.
International ratings agency Moody’s, which participated in the poll, saw Singapore receiving a boost from stronger foreign markets. “The export-oriented economy has benefited in 2017 from the widespread improvement in global demand. This has supported manufacturing and service activity in Singapore,” said Moody’s in a research note. Not everyone was so optimistic, however. Edward Lee, head of ASEAN economic research at Standard Chartered, said there was a risk that the wealthy-city state may enter a “statistical recession” in the second quarter due to a moderation in manufacturing output.
“I think we had a pretty strong start in Q1, if we took a look at Q2, it is nothing too bad to be fair, but the pace has slowed down slightly,” Lee said, referring to the manufacturing sector. Other analysts expected a recovery in services to offset any slowdown in manufacturing.
“Whatever slight slowdown we saw in manufacturing was offset by services. We did see a pickup in the property and banking sectors,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. Recent data pointed to a recovery in growth. Manufacturing output in May grew from a year earlier for a tenth successive month, an outcome that was seen by economists as reducing the risk of GDP contracting again on a quarter-on-quarter basis in the second quarter.
Economists surveyed by Singapore’s central bank last month have raised their 2017 Singapore growth forecasts, upgrading their views on manufacturing and bank lending. A majority of analysts believe that the Monetary Authority of Singapore (MAS) will keep monetary policy steady when it holds its next policy meeting in October.