GDP figures disappoint but no need to panic yet

Second quarter YoY GDP growth of 1.9% is still healthy amidst sluggish global economy and the eurozone crisis, says IG Markets Singapore.

IG Markets Singapore said:

The figures will disappoint as most traders were expecting a slightly higher rate of expansion. But there is no need to press the panic button, yet. Q2 year-on-year GDP growth of 1.9% is still healthy given the backdrop of the sluggish global economy and a eurozone crisis still alive and kicking.

The Singapore economy has been pretty resilient weathering the storm coming in from the eurozone by diversifying across a range of sectors including oil and gas, pharmaceuticals and electronics.

On a quarter-on-quarter basis the economy shrank 1.1% but this is a slightly unfair comparison as Q1 was a very different picture to Q2, when optimism, manufacturing and orders were much higher as traders expected the US economy to spark a global recovery.

But the headwinds are proving strong as Asia takes a hit from slowing European trade. All eyes will be on China now and the effects of the eurozone crisis on its economic growth.

While one hopes these figures mark a bottoming out for the local economy, Chinese GDP data will shed more light on this assumption.