S'pore economy grew 18.8% in Q2

From iTODAY:S'pore economy grew 18.8% in Q2

Ryan Huang | Aug 11, 2010 12:00 AM

SINGAPORE - The economy expanded 18.8 per cent in the second quarter from the corresponding period a year ago, slower than the initial estimate of 19.3 per cent, according to final data released yesterday by the Ministry of Trade and Industry (MTI).

Despite the economy growing slower than initially forecast, MTI said the headline number was still a record for quarterly growth - boosted by a broad-based recovery, especially in biomedical manufacturing, electronics and tourism.

"We have had an exceptional first half. Some of these factors are structural, and will continue to lend support in the second half," said Mr Ravi Menon, MTI's Permanent Secretary.

Overall, the first half growth was at 17.9 per cent on-year - a record since 1975.

Manufacturing drove the growth in the second quarter, led by production from the biomedical and electronics segments. Overall, the sector expanded 44.5 per cent on-year.

The construction sector grew 11.5 per cent, supported by an increase in public sector construction activities, while the services industries advanced 11.2 per cent in the same period.

Tourist arrivals in Singapore exceeded the 1 million mark for a single month for the first time in July, aided by the opening of two integrated resorts with casinos.

However, the ministry warned that growth would moderate for the rest of the year.

For one, the volatile biomedical manufacturing sector may weigh on the second half due to a high base, after the segment saw a 70-per-cent surge in production in the first six months.

Mr Leong Wai Ho, senior regional economist at Barclays Capital, said that in the first half, Singapore saw a spike in pharmaceutical output, which was higher than usual and unlikely to be repeated.

"This really reflects the switch over in the product mix in pharmaceuticals from relatively more patented drugs to generic drugs, so it's producing this large fall in output as a result," Mr Leong said.

The MTI said one key risk on the macroeconomic front would be the US economy.

The ministry added that while a double-dip recession was unlikely in the US, the recovery there would remain sluggish going into next year.

This means that, while the downside risks to growth from the European debt crisis appear to have eased somewhat, the overall situation is still fragile.

The Government kept its forecast for Singapore's economy to grow between 13 per cent and 15 per cent this year, which would still make the country the world's fastest growing economy. With additional reporting from Agencies.