The Singapore economy grew by 2.2% year-on-year in the second quarter of 2016, as the manufacturing and services sectors improved on their performance in the first quarter.
The republic’s gross domestic product (GDP) moved up marginally from the 2.1% growth in the previous quarter, according to an official release by the Ministry of Trade and Industry (MTI). On a quarter-on-quarter seasonally adjusted annualized basis, the economy expanded by 0.8%, faster than the 0.2% growth in the preceding quarter.
The manufacturing sector expanded by 0.8% year-on-year in the second quarter, a reversal from the 0.5% decline in the previous quarter. Growth was supported by an increase in the output of the biomedical manufacturing and electronics clusters. On a quarter-on-quarter basis, the sector grew 0.3%, following the 18.4% growth in the preceding quarter, said MTI.
The construction sector expanded by 2.7% year-on-year in the second quarter, easing from the 4.5% growth recorded in the previous quarter. The moderation was largely due to a slowdown in private sector construction activities. Quarter-on-quarter, the sector expanded at 0.6%, lower than the 3.5% expansion in the preceding quarter.
Growth in the services-producing industries came in at 1.7% year-on-year in the second quarter, the same pace of growth as in the previous quarter. Growth was driven mainly by the wholesale and retail trade and the transportation and storage sectors. On a quarter-on-quarter basis, the services-producing industries grew by 0.5%, reversing the 4.8% contraction in the preceding quarter.
However, industry watchers remain cautious about the economic prospects of Singapore. Economists say recovery may be difficult to sustain as risks to global growth, including external headwinds from the Brexit vote, climb.
Korea’s central bank trims growth outlook
On the other hand, South Korea’s central bank has revised down its growth outlook for Asia’s fourth largest economy to 2.7% from 2.8% three months earlier, citing sluggish consumption at home and abroad.
The quarterly revision by the Bank of Korea (BOK) came shortly after the government slashed its outlook for 2016 to 2.8% from 3.1%.
“The local economy will maintain its modest growth trend on expansionary economic policies, but the bank believes local and external uncertainties surrounding the path to growth will remain high,” BOK Governor Lee Ju-yeol told a local press briefing, as reported by Yonhap News.
South Korea’s exports have fallen every single month since the start of 2015, apparently forcing the central bank to twice slash its growth outlook to 2.8% in April and again to 2.7% this month from the initial 3% expansion offered at the start of the year.
Local spending, also a major growth engine here, gained only 0.9% year-on-year in the first six months of the year, falling far short of the bank’s 2% target for the 2016-2018 period.
Still, the central bank said an increase in local spending will mostly support the overall economic growth this year, noting the local economy is expected to expand 2.4% on domestic consumption, while exports are expected to contribute only 0.3 percentage point to the overall expansion.
The bank said the local economy is expected to grow 2.4% in the second half of the year, following a 3% expansion in the first half.
The BOK said GDP is forecast to grow 2.9% in 2017, with consumer prices expected to rise 1.9% in the same year.
Photo: RoB
