Singapore avoids recession after modest growth in Q2

  • Q2 GDP grows 0.3% q/q, versus contraction in Q1
  • Economists warn of a possible downward revision in the final data
  • Monetary policy is on hold

SINGAPORE, July 14 (Reuters) – Singapore’s economy narrowly escaped recession after posting moderate growth in the April-June period, as global demand weakened and China’s slowdown dragged down trade.

The economy grew a seasonally adjusted 0.3% in the quarter, following a 0.4% contraction in the first quarter, preliminary government data showed on Friday. Four economists polled by Reuters had forecast growth of 0.3% with quarterly estimates.

OCBC economist Selina Ling said that although Singapore has survived the tech recession for now, the final GDP figures for the second quarter may be revised lower due to recent signs of softening growth in China.

„I don’t think we’re completely out of the woods. It’s still a half-full-half-empty situation,” Ling said, adding that he expects the central bank to make no changes to monetary policy at a scheduled review in October.

China’s reopening has fueled hopes for a sustained recovery in trade and tourism, particularly in Singapore’s export-oriented economy, but demand has weakened in the wake of higher interest rates and strong inflationary pressures.

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

The government has forecast GDP growth of 0.5% to 2.5% this year.

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

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Singapore’s inflation rose in the first half of the year, but officials said core prices will moderate further in the second half.

After tightening five times in a row since October 2021, Singapore’s Monetary Authority left its policy settings unchanged in April, reflecting concerns about the city-state’s growth outlook.

Report by Chen Lin; Editing by Martin Petty and Jacqueline Wong

Our Standards: Thomson Reuters Trust Principles.

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