Hopes of a recovery in Singapore's manufacturing industry escalate

Thanks to strong 2Q GDP.

According to UOB Economic-Treasury Research, the release of a stronger-than-expected 2Q GDP estimate today supports their analysts' positive outlook for a cyclical recovery in Singapore’s externally-oriented industries (primarily manufacturing and wholesale trade). 

Compared to what was seen just a year ago, external macroeconomic conditions have become more stabilized as the US begins a slow pace of recovery and the sovereign risks issues in the Eurozone have toned down.

Here's more from UOB Economic-Treasury Research:

As such, we believe the healthy domestic demand in Asia will continue to prop up regional prospects in the 2nd half of this year, and spilling over to 2014. That said, we still maintain our 2013 GDP growth at 3.0% which is at the upper bound of official government’s forecast of 1-3%. 

Not to be neglected are possible domestic headwinds to our GDP growth in the second half of this year which will come in the form of higher production costs due to rising labour costs, and still-high industrial rentals.