Singapore's GDP grew 2.9% in Q2, beating expectations

SINGAPORE — Economic growth in the past three months added to the fastest pace of expansion in six quarters as reviving global demand for electronic goods put Singapore's semiconductor industry back in the driving seat.

Gross domestic product (GDP) grew 2.9 per cent year on year in the second quarter, according to advance estimates from the Ministry of Trade and Industry (MTI) on July 12. That came after the first quarter growth was revised higher to three per cent — the fastest pace since the 4.2 per cent expansion in the third quarter of 2022.

On a quarter-on-quarter basis and seasonally adjusted, the economy expanded 0.4 per cent, the most since the second quarter of 2023 and up from the revised 0.3 per cent gain in the first quarter of 2024.

The year-on-year growth was higher than the 2.7 per cent forecast by economists polled by Boomberg, while quarter-on-quarter growth was in line with their prediction.

Growth was supported by a rebound in the manufacturing sector to 0.5 per cent expansion year on year after a 1.7 per cent contraction in the first three months of the year.

Along with construction that grew 4.3 per cent, the overall goods producing industry posted an expansion of 1.3 per cent versus contraction of 0.7 per cent.

The manufacturing sector expansion in the second quarter was aided by output expansions across all its clusters, except for biomedical manufacturing and precision engineering.

On a quarter-on-quarter seasonally adjusted basis, manufacturing grew by 0.6 per cent, rebounding from the 5.3 per cent contraction in the first quarter.

Second quarter GDP growth was also aided by the group of clusters comprising the information and communications, finance and insurance and professional services sectors. Together, they grew by 5.6 per cent year on year in the second quarter, extending the 5.7 per cent growth in the previous quarter.

On a quarter-on-quarter seasonally adjusted basis, this group of sectors expanded by 1.4 per cent, a turnaround from the 2.8 per cent contraction in the preceding quarter.

The information and communications sector was supported by continued strong demand for IT and digital solutions, while that in the professional services sector was led by the head offices and business representative offices segment, the MTI said.

Growth in the finance and insurance sector was largely supported by the activities auxiliary to financial services, banking and fund management segments.

However, the services sectors — comprising accommodation and food services, real estate, administrative and support services and other services — grew by 1.9 per cent year on year in the second quarter, slower than the three per cent growth in the previous quarter.

Still, the spurt in GDP growth will likely help the economy achieve MTI's full-year 2024 forecast of one per cent to three per cent growth.

The GDP data follows June's release of factory output figures, showing a surprise 2.9 per cent year-on-year rebound in May. Economists had predicted a 1.4 per cent expansion in a Bloomberg poll, up from a 1.2 per cent contraction in April.

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This article was first published in The Straits Times. Permission required for reproduction.