Singapore economy’s growth forecast down to 5 - 6%

The Ministry of Trade and Industry has revised Singapore's 2011 growth forecast to 5.0-6.0% from 5.0-7.0% previously; this new forecast comes on the heels of a 4.9% growth in 1H11. In 2Q11, Singapore's economy grew by 0.9% YoY, better than the original flash estimate of 0.5%.

On a seasonally-adjusted QoQ annualized basis, the economy contracted by 6.5%, compared to the 27.2% expansion in 1Q11. On a sectoral basis, manufacturing contracted by 5.9% YoY in 2Q11, largely due to a decline in biomedical manufacturing and electronics output. Construction growth eased to 1.5% compared to 2.4% in 1Q11.

Growth in the services sector also slowed to 3.9% compared to 7.6% in 1Q11. On a positive note, the dampening effects of supply chain disruptions from Japan's earthquake and higher energy prices have started to wane, and Singapore's economic growth in 2H11 is expected to be bolstered by certain industries (biomedical, financial and tourism). However, MTI notes that downside risks have also increased as concerns of a double-dip recession in the US have emerged, and sentiment in the EU remains fragile.