Singapore's economy grows slightly in Q2, averts recession

SINGAPORE - Singapore's economy narrowly escaped a recession after posting modest growth in the April to June period, as global demand weakened and China's slowdown dragged on trade.

The economy grew a seasonally adjusted 0.3 per cent quarter-on-quarter, following a 0.4 per cent contraction in the first quarter, preliminary government data showed on Friday (July 14). Four economists with quarterly estimates had forecast growth of 0.3 per cent in a Reuters poll.

Oversea-Chinese Banking Corporation (OCBC) economist Selena Ling said that while Singapore had escaped a technical recession for now, there was a possibility that final Gross Domestic Product (GDP) figures for the second quarter could be revised lower due to recent signs of softening growth in China.

"I don't think we are out of the woods completely. It is still a half full half empty kind of situation" Ling said, adding she expects the central bank to make no changes to monetary policy in a scheduled review in October.

China's reopening had fuelled hopes for a sustained recovery in commerce and tourism for the region, especially Singapore's export-dependent economy, but demand has weakened in the wake of higher interest rates and strong inflationary pressures.

On an annual basis, the economy expanded 0.7 per cent in the second quarter, data from the Ministry of Trade and Industry showed. That compared with 0.4 per cent growth in the prior quarter and a 0.6 per cent expansion forecast in a Reuters poll.

The government has projected GDP growth of 0.5 per cent to 2.5 per cent for this year.

In May, the ministry said it did not expect a technical recession - defined as two consecutive quarters of contraction - this year but acknowledged that the external demand outlook for the rest of the year had weakened.

Singapore's inflation had remained elevated in the first half of this year, but authorities have said core prices should moderate further in the second half.

The Monetary Authority of Singapore left its policy settings unchanged in April, after tightening five times in a row since October 2021, reflecting concerns over the city-state's growth outlook.

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