Singapore avoids recession due to growth in services sector

The Lion City is expected to post a 0.8% GDP increase this year.

Singapore’s economy averted a potential recession, posting a gross domestic product growth of 0.7% year-on-year (YoY), on the back of the robust expansion in the services sector, offsetting the contraction in manufacturing.

In a report, Maybank noted that the services sector rose by 3% YoY, on the back of the wholesale and retail trade, which grew 2.6%. 

This was also supported by the transportation and storage sector which saw a 114.7% rise in air passenger volumes in April/May, an 8.3% increase in container throughput, and a 3.5% jump in sea cargo.

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Infocomm, finance and insurance, and professional services also posted a 1.5% growth.

The rise in the services sector offset the 7.5% decline in the manufacturing sector, and the 6.6% easing in the construction sector.

“We maintain our full-year GDP growth forecast of +0.8%, which is at the lower end of (Ministry of Trade and Industry’s) forecast range of 0.5% to 2.5%. Manufacturing is expected to remain tepid in the second half due to weak external demand, with the modest export boost from China’s reopening insufficient to offset weakening demand from other regions,” Maybank said. 

“Services may remain supported by consumer-facing segments with the recovery in visitor arrivals, particularly in tourism-sensitive industries like accommodation and F&B. Nonetheless, we expect services growth to ease with fading reopening tailwinds and slowing visitor arrivals momentum,” it added.