The economy has picked up pace due to strong global demand in the biomedical, aerospace and marine industries, robust regional demand for financial services, and a buoyant domestic property market, the MTI said on Friday. -- PHOTO: BT
SINGAPORE - THE economy picked up pace in the second quarter, with the gross domestic growth (GDP) expanding by 8.6 per cent year-on-year following 6.4 per cent in the previous quarter, thanks to a boom in the construction and financial industries, data showed on Friday.
Growth on a seasonally adjusted quarter-to-quarter annualised basis grew at a faster-than-expected rate of 14.0 per cent in the second quarter.
The seasonally adjusted rise from the previous quarter compared with 12.4 per cent growth forecast by analysts in a Reuters poll and the government's advance estimate of 12.8 per cent which was largely based on data from April and May.
The Ministry of Trade and Industry said in a statement the Singapore growth grew 7.6 per cent in the first half of 2007.
It said growth has become more broad-based in the second quarter, with financial services and construction sectors registering double-digit growth. The manufacturing sector remained healthy despite a slowdown in electronics.
'The driving factors underpinning the higher growth forecast are broad-based: strong global demand in the biomedical, aerospace and marine industries, robust regional demand for financial services, and a buoyant domestic property market.'
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'The services sector did a lot better than expected. Not only the financial sector was strong, but the wealth effect from higher property prices and a strong stock market contributed to the growth in the services sector,' said Song Seng Wun, an economist at CIMB.
'But given the uncertainty in the financial markets, we expect the impact of the fallout from the credit crunch in the US might be felt in the fourth quarter.'
'The first half has been very good for Southeast Asia because there was a lot of capital-raising for both debt and equity which drove the financial sector,' said Rohit Chatterji, who runs the investment banking business for US bank JPMorgan in Southeast Asia.
That underpinned the strong performance of Singapore's financial services sector, which recorded annualised growth of 39.7 per cent in the quarter thanks to strong business at banks, wealth managers and funds in the city-state's financial district.
Manufacturing, up 17.2 per cent on an annualised and seasonally adjusted basis, managed a rebound after a drop of 6.2 per cent in the first quarter, due to demand for offshore oil rigs and drugs. Electronics production remained lacklustre.
Construction was up 15.0 per cent amid a property market boom.
The Ministry raised the full-year GDP growth forecast for 2007 to 7.0-8.0 per cent from 5.0-7.0 per cent, taking into account, 'a healthy external environment, the broad-based growth momentum across mjaor sectors, continued growth in the composite leading index and strong business expectations. -- ST, REUTERS, AFP
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