SINGAPORE: The country narrowly avoided a technical recession after unexpected growth in the second quarter, July 14 data shows.
However, analysts are saying that because of weak demand overseas, the country is still facing headwinds due to the trade-reliant nature of its economy.
In June, fears of a technical recession, defined as two successive quarters of contraction, arose after May saw Singapore’s biggest fall in manufacturing output since 2019.
The economy had seen a 0.4 per cent decline in the first quarter of this year.
However, the latest data shows that the economy grew by 0.3 per cent from April to June of this year after a Bloomberg poll predicted it would contract by 0.2 per cent.
The government of Singapore has predicted that the GDP will grow between 0.5 per cent to 2.5 per cent in 2023.
And even as inflation stayed high for the year’s first half, the government expects it to moderate in the second half.
Ministry of Trade and Industry estimates say that the economy has grown by 0.7 per cent year-on-year for the second quarter after growing by 0.4 per cent from January to March.
The second quarter growth surprised many, given that the manufacturing sector decreased by 7.5 per cent year-on-year in the second quarter.
In the first quarter, the sector saw a 5.3-per cent decline year on year, and analysts say it may see a prolonged slump into the third quarter.
“The economy avoided a technical recession in the second quarter, but we continue to expect growth to come in well below consensus this year as elevated interest rates and weaker external demand weigh heavily on economic output,” the Agence-France Press quotes research house Capital Economics as saying. /TISG
Singapore at risk of technical recession after eight months of lower manufacturing output