Singapore’s economy unexpectedly expanded in the second quarter, staving off fears of a technical recession in the city-state amid a global slowdown.
Gross domestic product in the three months through June increased 0.3% from the previous quarter, the Ministry of Trade and Industry said in its advance estimate Friday. That compares with a 0.2% contraction in a Bloomberg survey and a decline of 0.4% in the January-March period.
On a year-on-year basis, the economy expanded 0.7% in the second quarter after a 0.4% gain in the prior period, according to the report. Survey respondents had forecast a 0.5% growth from the same period in 2022. The MTI figures were mostly computed from data in the first two months of the quarter.
Concerns over recession, defined as two consecutive quarters of negative growth, materialized in June with data showing industrial output plunged 10.8% from a year earlier and non-oil domestic exports shrank for an eighth consecutive month on slowing external demand.
The surprise expansion was buoyed by strong demand across the services sector, including in accommodation, which “saw robust growth in tandem with the strong recovery in international visitor arrivals,” according to the report.
The city-state has lately been buzzing with hype around high-profile concerts including Taylor Swift and Coldplay that are set to bring fans in from around the region and the world in early 2024 — a boon to Singapore’s event-hosting profile.
The Singapore dollar strengthened sharply after the report before moderating gains, with the currency up nearly 0.1% against the greenback as of 9:20 a.m. local time.
In May, the MTI said the economy was set to expand around the midpoint of a 0.5%-2.5% range this year. That number is subject to revision when Singapore’s second-quarter growth numbers are finalized in August.
While the figures released Friday could change as more data are collected, Singapore’s surprise growth cuts against global worries that recessions could materialize in advanced economies and spread pain worldwide.
Policymakers continue to weigh downside growth risks against the potential for stickier inflation than expected, with Monetary Authority of Singapore Managing Director Ravi Menon saying last week that “the fight against inflation is not over.”
--With assistance from Ailing Tan, Mark Cranfield and Marcus Wong.
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