S’pore avoids recession on solid global demand for tech goods

SINGAPORE: Singapore’s economy grew in the second quarter, dodging a recession thanks to solid global demand for its tech products, though some analysts caution that rising rates in the United States could lift local borrowing costs in a blow to household spending.

The economy expanded 0.4 per cent in the April-June period from the previous three months on an annualised and seasonally adjusted basis, the Trade and Industry Ministry’s advance gross domestic product (GDP) estimate numbers showed yesterday.

Revisions to first quarter data showed the economy contracted by 1.9 per cent in January-March, weaker than the 1.3 per cent contraction estimated earlier.

The April-June quarter-onquarter growth was lower than a Reuters poll’s median forecast of 1.1 per cent, but analysts said it was still in line with their overall growth forecast for the citystate.

Besides weakness in construction, the services sector was also “soft”, analysts say, and partly the reason why GDP growth undershot expectations.

“The miss in Q2 was due to weak services output, likely reflecting tepid private consumption and a deceleration in wage growth,” said HSBC analysts in a research note.

Growth in electronics exports has been one of the highlights of Asia’s export recovery this year, boosting profits for companies tied into supply chains such as Apple Inc’s, which is gearing up for the launch of the iPhone 8 later this year.

While analysts voiced concern about Singapore’s dependence on its electronics industry, they said any moderation in growth could be offset by the service sector.