By Fathin Ungku
SINGAPORE, Aug 10 : Singapore’s economy is expected to have edged higher than initially expected in the second quarter thanks to a surge in factory activity, a Reuters poll found on Friday.
From the year earlier, Singapore’s second quarter final gross domestic product (GDP) was forecast to expand 4.1 percent, up from the 3.8 percent growth in the initial estimates announced in July but slower than the 4.3 percent growth seen in the first quarter, the poll’s median of 10 economist showed.
The poll also predicted quarter-on-quarter growth of 1.3 percent in the April-June period on a seasonally adjusted and annualised basis. That’s an acceleration from the 1.0 percent rise in the preliminary figure but slower than the 1.5 percent rise in the previous quarter.
The upward revisions, analysts say, are caused primarily by a jump in factory output seen in the second quarter, driven by the pharmaceutical and electronics sectors and recovery in the marine and offshore engineering industry.
However, a dependence on manufacturing and export sectors as well as an impending trade war between the United States and China are causes for concern.
“Singapore’s economy is still a one-trick pony, which is still led by manufacturing and trade-related sectors. The advance figures haven’t really shown that growth is broadening like what we first thought,” said Jeff Ng, Asia Chief Economist at Continuum Economics.
“With trade pressures coming in, it may cause the economy to come off a bit,” Ng added.
Singapore in April tightened its monetary policy for the first time in six years and an upward revision to GDP in the second quarter gives the central bank a stronger case to tighten again, analysts say.
But there are concerns that the simmering trade tensions between the United States and China, Singapore’s biggest export market, could keep policymakers on the cautious side.
“Let’s say the trade rhetoric becomes action… then there will be some room for reconsideration,” Ng said.