Singapore's economy grew 2.9 per cent year on year in the second quarter of 2024, comparable to the revised growth rate of 3 per cent in the previous quarter, going by advance estimates from the Ministry of Trade and Industry (MTI) on Friday (Jul 12).

On a seasonally adjusted, quarterly basis, gross domestic product rose 0.4 per cent, up from the previous quarter’s revised 0.3 per cent growth figure. Year-on-year growth beat economists’ expectations of 2.7 per cent, while quarter-on-quarter growth was in line with their forecast.

The improved performance has prompted several banks – including OCBC, DBS and Maybank – to raise their GDP forecasts.

Manufacturing grew 0.5 per cent year on year in Q2, reversing from the 1.7 per cent fall charted in the previous quarter.

All manufacturing clusters recorded output expansions, except biomedical manufacturing and precision engineering.

“The weakness in the biomedical sector (-35.8 per cent in April to May) has been somewhat puzzling, and some normalisation is likely in the second half,” said Maybank analysts Chua Hak Bin and Brian Lee. “We expect the electronics cluster to gather steam and lead the manufacturing recovery in the second half.”

DBS economist Chua Han Teng agreed. “Notably, electronics – which accounts for almost half of overall manufacturing production – is catching up, after correcting in Q1 2024.”

Sequentially, the manufacturing sector rose 0.6 per cent, turning around from the previous quarter’s 5.3 per cent decline.

Construction gained 4.3 per cent year on year, up from 4.1 per cent in the preceding quarter.

“Growth during the quarter was supported by an increase in public-sector construction output,” MTI said.

Quarter on quarter, seasonally adjusted, the construction sector expanded 2.4 per cent, reversing from the 1.9 per cent contraction in Q1.

Overall services growth slowed to 3.3 per cent in Q2, down from 4.3 per cent previously. Sequentially, services growth was flat, declining from the previous quarter’s 2.2 per cent growth rate.

Within services, the wholesale and retail trade sector, along with the transportation and storage sector, collectively grew 2.5 per cent on the year in Q2, moderating from 3.9 per cent in Q1.

Sequentially, the sectors expanded 0.7 per cent in Q2, down from 2.7 per cent in the previous quarter.

The group of services sectors comprising information and communications, finance and insurance, and professional services expanded 5.6 per cent year on year, marginally lower than 5.7 per cent in Q1.

Sequentially, this group grew 1.4 per cent, reversing from the 2.8 per cent decline in the preceding quarter.

Growth for the remaining group of services sectors – accommodation and food services, real estate, administrative and support services, as well as other services – came in at 1.9 per cent on the year. This was slower than the 3 per cent growth in the preceding quarter.

“Within the group, all sectors – except for the real estate and food services sectors – expanded during the quarter,” MTI said, highlighting growth in the accommodation and administrative and support services sectors in particular.

This group of services sectors collectively contracted 0.5 per cent on a sequential basis in Q2, turning around from the 2.3 per cent growth in the prior quarter.

DBS’ Chua said the dampened activity in Q2 was unsurprising.

“We reckon that this was likely due to the fading strength in tourism-linked clusters, with food services contracting and accommodation expanding at a slower rate,” he said. “The boost from high-profile concerts in Q1 2024 was a one-off and not repeatable in Q2 2024, which resulted in a pullback in foreign tourist arrivals and hotel occupancy rates.”

‍

Credit: The Business Times