Singapore’s economy probably expanded for the first time in five quarters as a rebound in manufacturing helped the Southeast Asian nation emerge from its worst recession since independence in 1965.
Gross domestic product rose an annualized 13.4 per cent last quarter from the previous three months, after shrinking 14.6 per cent between January and March, according to the median estimate of 12 economists surveyed by Bloomberg News. The trade ministry will release the data at 8am tomorrow.
Singapore and other economies in the region are forecast to report better second-quarter figures as about $2 trillion in stimulus worldwide helps stabilize overseas sales for companies including Japan’s Nissan Motor Co. and South Korea’s Samsung Electronics Co. The International Monetary Fund last week increased its forecast for emerging Asia’s growth in 2009.
“Much healthier manufacturing-sector numbers in the second quarter are the key drivers” of Singapore’s performance, said Chow Penn Nee, an economist at United Overseas Bank Ltd. in Singapore. We “will also likely see financial services boosting the services sector, with the rally in the stock markets in April, May and June.”
Singapore’s industrial output climbed in the first two months last quarter, while the decline in the island’s exports narrowed in May amid gains in drug shipments. Manufacturing, which slid 26.1 per cent in the three months ended March, accounts for about a quarter of the economy.
Other Asian nations have also reported an improvement in manufacturing. In May, India’s industrial production increased at the fastest pace in eight months, while Malaysia’s posted the smallest decline in six months. South Korea’s output rose more than estimated while China’s accelerated the same month.
Singapore’s $161 billion economy declined 5.4 per cent in the three months ended June from a year earlier, compared with a 10.1 per cent drop in the first quarter, according to the Bloomberg survey.
The Straits Times Index rose 37.2 per cent last quarter, the biggest gain since at least 1999. The volume of stocks traded increased more than 50 per cent in that period.
The government forecasts the economy will shrink between 6 per cent and 9 per cent this year, the deepest contraction since its independence 44 years ago. Economists at Citigroup Inc., Goldman Sachs and DBS Group Holdings Ltd. are among those that have increased their Singapore economic estimates in recent weeks as manufacturing and export figures showed improvement.
Signs of recovery were also evident in other parts of the economy, Citigroup’s Kit Wei Zheng said.
“Re-stocking driven rebounds in technology, continued growth in construction spending, financial services and a revival in the private housing market contributed to the recovery in the broader economy,” he said.