Singapore's economy

Singapore's economy contracted less than previously estimated in 2Q, and the govt narrowed its full-year growth forecast saying that the recovery in the global economy remains fragile and vulnerable to downside risks. Spore GDP contracted 0.7% in the Apr-to-Jun period compared with the previous quarter in seasonally adjusted and annualized terms, revising an earlier estimate of a 1.1% contraction released in July. Yoy, the economy expanded 2.0%, compared with 1.9% growth estimated earlier. The ministry said that for the whole of 2012 it expects the economy to expand between 1.5% and 2.5%, in line with estimates announced by PM Lee on Wednesday and revised from a previous estimate of 1.0% to 3.0%. Says, given the macroeconomic backdrop, “the growth outlook for the Singapore economy remains cautious". "Externally-oriented sectors, in particular electronics, wholesale and tourism-related services, will be affected by the slowdown in advanced economies." Narrows 2012 NODEX growth forecast to 4-5% from 3-5%. But the ministry does not expect a technical recession. Output in the manufacturing sector rose 4.5% yoy, vs previously estimated growth of 3.0%. The services sector grew 0.8% yoy, vs with 1.0% growth reported earlier, while construction activity gained 5.3% rather than 5.1%. Credit Suisse notes, the Spore economy still faces some strong headwinds from external factors. Says comments from the govt suggest there could still be some global macroeconomic pain yet to weigh on the export-focused domestic economy. Notes, moving forward in Oct, the MAS would likely have a bias toward focusing on growth rather than inflation. Similary, UOB says the data opens room for some policy easing. The USD/SGD is slightly higher at 1.2455, vs 1.2437 in late Asia Wednesday.