Singapore’s economy avoided a technical recession in the second quarter, growing 0.7% year-on-year and 0.3% quarter-on-quarter, advanced estimates showed.
Economists polled by Reuters expected to see growth of 0.3% quarter-on-quarter and 0.6% year-on-year.
In the first quarter, Singapore’s economy contracted by 0.4% quarter-on-quarter on a seasonally adjusted basis and saw marginal growth of 0.4% year-on-year.
The latest data comes after the Monetary Authority of Singapore, the city-state’s central bank and financial regulator, warned of an “uncertain” growth outlook earlier this month.
“The near-term outlook remains uncertain with downside risks,” the MAS said in an annual review. “Should latent vulnerabilities in the global financial system emerge in the coming months, consumer and investor confidence could take a further hit, with adverse implications for the broader economy,” it said.
In its annual review, MAS estimated the gross domestic product for 2023 to ease to a range of 0.5% to 2.5%, lower than the growth of 3.6% in 2022.
The Singapore dollar slightly strengthened against the U.S. dollar after the GDP release and traded at $1.321 against the greenback.
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Singapore’s manufacturing sector noticeably led declines in overall growth, contracting 7.5% from a year ago, a further decline from the contraction of 5.3% in the previous quarter.
“The weak performance of the sector was due to output declines across all manufacturing clusters, except for the transport engineering cluster,” Singapore’s Ministry of Trade and Industry said.
Singapore’s latest industrial production readings spurred concerns that the economy could enter a technical recession. The figures fell for a second month in May dropping 10.8% year-on-year, while its non-oil domestic exports plunged by 14.7% in May.
‘Pockets of resilience’
HSBC economist Yun Liu noted that Singapore is likely to avoid a recession throughout the year, adding that “there are still pockets of resilience” in the economy.
Pointing to a steady recovery in visitors to Singapore, Liu said in HSBC’s third-quarter outlook report, “The ripples will mostly come from travel and tourism sectors,” adding that the resumption of Chinese tourists has yet to reach 2019 levels.
Monthly statistics from its tourism agency showed Singapore has consistently welcomed over 1 million arrivals since March this year.
“While the return of Chinese tourists is only back to 30% of the equivalent level (2019 levels), Singapore is, nonetheless, the champion in restoring direct flights with China,” Liu said. “This paves the way for an acceleration in Chinese tourists in the coming months, supporting Singapore’s services sectors.”