S'pore economy rebounds with 3.2% rise in second quarter

S'pore economy rebounds with 3.2% rise in second quarter

Chris Foley, Associated Press, Singapore

Singapore confirmed a rebound from recession with strong 3.2
percent second quarter economic growth in the first year-on-year
rise for 15 months, according to snap estimates released
Wednesday.

But economists warned that while figures for the crucial
manufacturing sector were stronger than expected, the recovery
was not broad-based.

The growth in the three months to June, which followed a
decline of 1.5 percent in the first quarter, was at the upper end
of economists' estimates. However, it was driven by growth in the
chemicals sector, which accounts for only 12 percent of
manufacturing.

On an annualized quarter-on-quarter basis, the economy grew
10.3 percent compared to 8.4 percent in the previous quarter.

"Basically the economy is on the recovery track. It looks
good, especially quarter-on-quarter. This indicates the momentum
is there," said DBS Bank economist, Kaan Quan Hon.

But a 133 percent year-on-year surge in May's biomedical
sciences production was unlikely to be sustained, he added.

Although the result was not enough for the government to lift
its two-to-four percent growth forecast for the full year, the
trade and industry ministry expressed confidence in reaching the
upper end of the estimate.

"The substantial improvement can be attributed mainly to an
exceptional surge in activity in the chemicals cluster, whose
quarterly performances are typically volatile," the ministry
said.

"This resulted in a strong but narrowly-based rebound in the
manufacturing sector."

Output by goods producing industries is estimated to have
expanded by 7.5 percent during the quarter from a year earlier,
the sector's best performance since the 2000 boom.

This followed a 4.4 percent decline in the previous quarter
and double-digit retractions in the two quarters before that.

But Kaan at DBS said that while the numbers looked good, they
needed to be put into perspective, with the spotlight on the
comparatively small chemicals cluster.

"The recovery is still uneven. We don't expect a quality
improvement until next year," he said, adding that GDP this year
may surprise by exceeding his four percent estimate.

The 3.2 percent growth was stronger than market expectations,
agreed Steve Brice, chief economist at Standard Chartered Bank
which has set its growth forecast for the year at 3.5 percent
from an earlier 2.5-3.5 percent.