Singapore's Q2 GDP Surpasses Expectations, Signals Economic Resilience
On a quarter-on-quarter basis, manufacturing grew by 0.6%, a notable recovery from the 5.3% contraction in the previous quarter. This resurgence in manufacturing is a positive indicator for Singapore's export and GDP
Singapore's economy demonstrated remarkable resilience in the second quarter of 2024, with a year-on-year growth of 2.9%, surpassing economists' forecasts of 2.7%. This robust performance underscores the city-state's ability to navigate global economic uncertainties and positions it for continued expansion in the coming year.
The Ministry of Trade and Industry (MTI) released advance estimates on July 12, revealing that the second-quarter growth was comparable to the revised 3% expansion seen in the first quarter. On a seasonally adjusted quarterly basis, the GDP rose by 0.4%, slightly higher than the previous quarter's 0.3% growth.
Dr Ahmad Zaharuddin Sani
Manufacturing Sector Rebounds
A significant contributor to this growth was the manufacturing sector, which reversed its first-quarter contraction of 1.7% to post a 0.5% year-on-year expansion in Q2. This turnaround was driven by increased output across all manufacturing clusters, except for biomedical manufacturing and precision engineering. The electronics sector, in particular, saw a robust performance, with the semiconductor segment rebounding strongly.
On a quarter-on-quarter basis, manufacturing grew by 0.6%, a notable recovery from the 5.3% contraction in the previous quarter. This resurgence in manufacturing is a positive indicator for Singapore's export-driven economy, suggesting a recovery in external demand.
Construction Sector Growth
The construction sector also showed promising growth, expanding by 4.3% year-on-year, up from 4.1% in the first quarter. This growth was primarily supported by an increase in public-sector construction output. On a quarterly basis, the construction sector grew by 2.4%, reversing the 1.9% contraction seen in Q1.
Services Sector Performance
The services sector, which constitutes a significant portion of Singapore's economy, experienced mixed results. Overall services growth slowed to 3.3% year-on-year in Q2, down from 4.3% in the previous quarter. Sequentially, services growth was flat, a decline from the 2.2% growth rate recorded in Q1.
Within the services sector, the information and communications, finance and insurance, and professional services segments posted the highest growth at 5.6% year-on-year. This was marginally lower than the 5.7% growth in the first quarter. The continued strong demand for IT and digital solutions, along with activities supplementary to financial services, banking, and fund management, supported this growth.
Conversely, the wholesale and retail trade, and transportation and storage sectors grew by 2.5% year-on-year, a moderation from the 3.9% growth in Q1. The accommodation and food services, real estate, administrative and support services, and other services sectors collectively grew by 1.9%, down from 3% in the previous quarter. Notably, the sustained recovery in international visitor arrivals bolstered growth in the accommodation and administrative support services sectors.
Economic Outlook: Better GDP
Looking ahead, Singapore's economic outlook remains cautiously optimistic. The MTI has projected a growth range of 1% to 3% for 2024, contingent on the recovery of external demand and the global economic environment. The city-state's strategic focus on innovation, digital transformation, and diversification of its economic base will be crucial in navigating potential headwinds.
The recent GDP figures reflect Singapore's resilience and adaptability in the face of global economic challenges. As the world continues to grapple with economic uncertainties, Singapore's proactive measures and strategic initiatives will play a pivotal role in sustaining its growth trajectory.
Singapore's better-than-expected Q2 GDP growth is a testament to its robust economic fundamentals and strategic foresight. As the city-state looks to the future, its ability to leverage its strengths and adapt to changing global dynamics will be key to maintaining its position as a leading economic hub in the region.