Singaporean economy likely to have expanded 3.1 pct year-on-year in Q2, says DBS Bank

Singapore’s advance GDP estimates for the second quarter is set to be released this week. According to a DBS Bank research report, the economy is likely to have expanded 3.1 percent year-on-year in the second quarter, up from the 2.7 percent growth recorded in the first quarter. On a sequential basis, the economy is likely to have grown 2.3 percent, a reversal from the drop of 1.3 percent earlier.

Manufacturing sector is likely to have moderated in the second quarter. The electronics rally is indicating some signs of lethargy lately and higher frequency figures on non-oil domestic exports and industrial output are implying that overall manufacturing performance is tapering off, noted DBS Bank. The PMIs and semiconductor billings, and shipments data are signalling some side-way moves in the wider manufacturing output trend.

Meanwhile, the services sector is likely to have picked up some of the slack in the manufacturing. Loan growth, re-exports figures and container throughput are all trending higher. These imply that the externally oriented services segment would possibly be the main driver. However, the domestic segment is likely to weigh on the growth because of the subdued labor market at present and structural challenges.

While growth trajectory is likely to be biased towards a marginal upward trend in the months ahead, the rate of growth might be tepid. In all, the GDP growth for 2017 is still likely to come in at 2.8 percent but a sharper moderation towards the tail-end of the year could be expected, stated DBS Bank.