Here's how Singapore's economy fared in 2Q12

Outlook is still cautious as economy shrank 0.7%.

According to Knight Frank, the Singapore economy shrank by 0.7 per cent quarter-on-quarter in 2Q 2012, reversing the 9.5 per cent   growth in 1Q 2012. On a year-on-year basis, overall GDP grew by 2 per cent in 2Q 2012 compared to 1.5 per cent in the previous quarter.

The quarterly contraction is mainly due to a decline in externally-oriented  sectors such as electronics manufacturing, wholesale trade and tourism-related services. Transport engineering and biomedical manufacturing clusters provided growth support whilst electronics, business and other services industries weakened.

Despite the bearish market sentiment, Singapore has held reasonably well against a backdrop of economic turmoil in Europe and the US, and slowdowns in China and India economies. 2Q 2012 period still saw positive y-o-y growth for total trade and non-oil domestic exports (NODX), though at a slower rate compared to 1Q 2012.

Total trade for Singapore continued to grow by 2.9 per cent y-o-y in 2Q 2012, slower than the previous quarter’s rise of 7.5 per cent. Overall level of oil and non-oil trade reached $252 billion, similar to 1Q 2012 achievement. Trade in 2Q 2012 was mainly boosted by intra-Asian trade particularly with Malaysia, China and Vietnam.

NODX expanded by 3.9 per cent y-o-y in 2Q 2012, following the previous quarter’s increase of 6.1 per cent. This was due to the higher shipments of both electronic and non-electronic NODX. However on a q-o-q basis, total external trade declined by 3.1 per cent in 2Q 2012, in contrast to 1Q 2012 growth of 5.3 per cent. The projections for both total trade and NODX growth in 2012 are narrowed from 3 and 5 per  cent to 4 and 5 per cent.

Singapore continued to face inflationary pressures, with the Consumer Price Index having risen by 5.3 per cent y-o-y in 2Q 2012, higher than 4.9 per cent in 1Q 2012. The marked increase in consumer prices is chiefly due to higher accommodation and private transport costs. The Monetary Authority of Singapore expects CPI-All Items inflation to average around 3.5 per cent to 4 per cent this year, with costs of accommodation and cars to account for more than half of overall inflation.

With the confluence of subdued business conditions and downside risks in the global economy, the outlook for Singapore’s economy remains cautious. The Ministry of Trade and Industry has narrowed this year’s
GDP forecast from 1 to 3 per cent, to 1.5 to 2.5 per cent.