UPDATE 2-Singapore's advance Q2 GDP grows 2.9% y/y, better than expected

Xinghui Kok
2-min read

(Recasts and adds economists' forecasts in paragraph 4)

By Xinghui Kok

SINGAPORE, July 12 (Reuters) - Singapore's economy grew 2.9% in the second quarter of 2024 from a year earlier, better than economists expected, preliminary government data showed on Friday.

The better than expected figure and an upward revision to first quarter data to 3.0% led economists to upgrade their gross domestic product (GDP) forecasts for the year. Singapore's trade-dependent economy often functions as a bellwether for the economic health of Asia that belies its size.

Economists surveyed by Reuters had forecast annual GDP growth would come in at 2.7% in the April to June period.

Maybank's Chua Hak Bin revised his forecast to around 2.8%-3% for the full year, up from 2.4%. OCBC Chief Economist Selena Ling changed hers to above 2.5% from 2.3%.

"The manufacturing recovery is gaining traction a bit earlier than expected in the second quarter rather than the second half of 2024," Ling said.

On a quarter-on-quarter seasonally adjusted basis, GDP expanded 0.4% in the second quarter, the data from the Ministry of Trade and Industry showed.

The manufacturing sector grew by 0.5% in the second quarter, a reversal from the 1.7% contraction in the previous quarter.

The advance second-quarter GDP data comes after the Asian financial hub registered its fastest growth in 18 months in the first quarter.

In May, the trade ministry maintained its economic growth forecast for 2024 at 1.0% to 3.0%.

Singapore's GDP increased 1.1% last year, slowing from 3.8% in 2022.

While annual core inflation has fallen from a peak of 5.5% in early 2023 to 3.1% in recent months, it has remained stubbornly elevated and hit a seven-month high in February.

The Monetary Authority of Singapore, the city-state's central bank, uses the exchange rate as its primary interest rate policy tool and is scheduled to next review its policy settings later this month.

The central bank has left monetary policy unchanged for four consecutive meetings through to April. (Reporting by Xinghui Kok; Editing by John Mair and Christian Schmollinger)