Singapore's Q2 GDP beat expectations, rises 2.9 pct annualized

Singapore's economy expanded at a pace faster than previously expected in the second quarter, inciting the administration to anticipate a smaller range for annual growth this year. Singapore's Q2 GDP grew much faster than expected at 2.9 percent y-o-y, higher than the market consensus of 2.5 percent and, more significantly, at 2.2 percent on a seasonally adjusted quarter-on-quarter annualized basis, also way better than market expectations of 0.5 percent.

Improvement in trade beginning from the end of 2016 has been one of the essential drivers of the nation's speedier than-anticipated growth, giving a lift to the two its manufacturing and services sectors. The current outcome has in this manner left the government more hopeful about the economy, revising its GDP growth forecast for 2017 from 1-3 percent to 2-3 percent.

Additionally, the nation's manufacturing sector has liberally profited by the recent revival in worldwide trade, especially from solid Chinese demand for hardware and other manufactured products. The manufacturing sector grew 8.1 percent y/y in 2Q17, beating the government's underlying assessment of 8.0 percent. Also, the sector has now developed by a normal of 9.4 percent since Q3 2017 after growing by only a normal of 1.0 percent in the three-quarters prior.

On a saar q-o-q basis, the manufacturing sector expanded by 2.9 percent, accelerating from the 0.3 percent growth in the previous quarter. This provided a significant lift to the country's economic momentum, which expanded by a seasonally-adjusted 2.2 percent in Q2 2017 from a 2.1 percent contraction in the preceding quarter.

The services sector, which accounts for about two-thirds of the economy, also continues to shine, growing by 7.2 percent y/y compared to 6.2 percent in Q1. As a matter of fact, services have expanded by 1ppt each quarter since Q3 2016.

Singapore's administration is currently demonstrating a moderately more bullish outlook for the economy, in light of the current GDP figures. Notwithstanding narrowing its entire year figure for the economy, the MTI additionally said in its media release that worldwide growth in 2017 is on track to come in higher in 2017 as compared with 2016, giving a more inspirational outlook to the country’s trade.

Lastly, the  MAS may also choose to approach policy normalization more cautiously this time than in the past, due to possible concerns over Singapore's medium-term growth - particularly to population aging, changes in immigration policy, and as the economy approaches the technology and productivity frontier. Moreover, domestic consumption remains relatively subdued, despite higher export figures, as highlighted by weak private consumption and gross capital fixed formation.

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