Singapore raised its economic growth and exports forecast for the year as second quarter gross domestic product (GDP) and June trade data came in above forecast.

Singapore’s GDP rose a stunning 19.3 percent in the second quarter of 2010 from a year earlier, far above expectations, according to advance estimates from the Ministry of Trade and Industry.

The economy expanded 26.0 percent in the April-June period on an annualised and seasonally adjusted basis.

International Enterprise Singapore, the country’s trade agency, also said non-oil domestic exports (NODX) jumped 28.7 percent in June from a year earlier.

Singapore now expects its economy will grow by 13-15 percent this year, up from a previous forecast of 7-9 percent, while NODX is expected to expand by 17-19 percent, up from the earlier projection of 15-17 percent.

Key Points

  • First quarter GDP growth revised upward due to a stronger performance in manufacturing, in particular by the biomedical cluster.
  • Manufacturing grew 45.5 pct y/y in Q2 vs 38.2 pct in Q1
  • Services expanded 11.4 pct in Q2 vs 11.2 pct in Q1, helped by stronger trade flows, boost from two new casinos
  • Government says exceptionately strong growth in first half not likely to be sustained into the second half


Chow Penn Nee, Economist, UOB: “It is a strong GDP number boosted by manufacturing in the first half but the subdued outlook is slightly worrying… That pertains to the negative sentiment in Europe that is still continuing with the credit rating on downgrade Portugal, and still-slow growth in the U.S.”

“We still expect monetary policy to remain the same for now, even though we have strong domestic numbers.”

“Going forward, external factors would make exports more subdued, so we don’t expect the same growth that you see in manufacturing. But services will still keep up.”

Wei Zheng Kit, Economist, Citi: “This is amazing, the number that we see.. The government had to revise the previous forecast to make it more realistic with the number that has shown. It looks like we are at the peak of the cycle. When you look at the number, it is flattening out, the flat demand (for exports) from the U.S. and some kind of slowdown in China. It is not a slump, not a double-dip, but a slowdown in growth.

“Exports to Europe in June were still strong because a lot of products to the EU were pharmaceuticals. It has nothing to do with the crisis.”

Dave Cohen, Head of Regional Forecasting at Acton Economics: “Singapore policymakers will have to keep a lookout for overheating, though they will probably wait till the October semi-annual review to tweak policy.”

“I don’t think there’s a need for an immediate adjustment. Inflation is under control, the Singapore dollar is already on a rising trend and commodity prices are moderating which will help keep a cap on price pressures.

“Singapore’s growth will clearly surpass China’s, and may be the fastest in the world. But I won’t put too much emphasis on that. Singapore is rebounding from a contraction whereas China continued to grow at an 8-9 percent pace last year.”