Singapore Eludes Technical Recession as Economy Grows by 0.7% in Q2

Singapore's economy expanded by 0.7% year-on-year in the second quarter of 2023 and 0.3% on a quarter-on-quarter basis, according to advance estimates released by the Ministry of Trade and Industry (MTI) on July 14.

The economy grew by 0.3% on a quarter-on-quarter seasonally-adjusted basis – an about-turn from the 0.4% contraction in the first quarter of the year. This has seen Singapore avoid a technical recession or two consecutive quarters of contraction or negative GDP growth.

The manufacturing sector contracted, dipping by 7.5% year-on-year in the second quarter of 2023. As per the MTI, "output declines across all manufacturing clusters, except for the transport engineering cluster" are behind this poor performance.

Meanwhile, the construction sector (6.6%); wholesale & retail trade and transportation & storage sectors (2.6%); and accommodation & food services, real estate, administrative & support services, and other services sectors (6.1%) all exhibited growth year-on-year in the second quarter.

The group of sectors consisting of information & communications, financial & insurance, and professional services also collectively expanded by 1.5% year-on-year. However, the MTI noted that the finance & insurance sector contracted "on account of the weak performance of the insurance and banking segments.”

Back in May, the MTI maintained its GDP growth forecast for the year at 0.5 to 2.5%, with expansion estimated at the midpoint of the range. In its annual report released early this month, the Monetary Authority of Singapore also said the outlook on economic growth remains "uncertain."

"Should latent vulnerabilities in the global financial system emerge in the coming months, consumer and investor confidence could take a further hit, with adverse implications for the broader economy.”