Hopes escalate for 'technical rebound' in Singapore economy

GDP predicted to climb 2.1%.

According to DBS, the key focus this week is the advance GDP estimates for the second quarter, which will be due this Friday. Hope is pinned on the possibility that the economy will bounce back from the sluggish first quarter growth to register a solid expansion of 8.3% QoQ saar, up significantly from 1.8% in the previous quarter. That makes for a stronger year-on-year growth of 2.1%, against a benign 0.2% rise in 1Q13.

However, DBS also noted that 2Q growth may look like a 'technical rebound' for the slump in the previous quarter.

Here's more from DBS:

All key sectors are expected to show significant improvement. The manufacturing sector will likely lead the pack with a swing from contraction to an expansion.

The services sector will also live up to expectation with possibly another good showing, thereby lifting the entire economy with it. Note that the performance ofthe services sector will have strong bearing on the overall outlook of the economy this year. Throw in another decent quarter of growth from the construction sector and there is enough for market to cheer about.

That is, a good outcome is on the cards this Friday and in fact, any upside surprise should not come as a surprise at all. Yet, it should also be noted that the global outlook remains dicey.

The growth path forthe developed economiessuch asthe US and Europe are expected to be placid. And with China now targeting a slower growth pace,second quarter growth will look more like a “technical rebound” for the slump in the first quarter.

Beyond that, growth profile will look flattish. Our full year GDP growth forecast remains at 2.5%.