What PM Lee's National Day message implies for Singapore's 2H GDP

Growth is pegged at 5%.

According to UOB Economist Francis Tan, based on Prime Minister Lee Hsien Loong's National Day message, GDP grew 2% y/y in 1H 2013. This means that 2Q GDP grew 3.8% y/y. (above our expectations actually).

As manufacturing likely only grew 0.22% y/y in 2Q (smaller than advance estimates of 1.1%), this implies that the bulk of the positive growth surprise came from the Services sector.

Here's more from Francis Tan:

I am postulating that Wholesale & Retail trade contributed quite alot to that. This is because the growth coming from Non oil Re Exports was pretty strong in 2Q (although NODX did not do that well). With good growth coming from the trade front, I can also see upside coming from Transport and Storage; while the other sectors such as Finance & Insurance and Biz Services will do well.

From the upgrade to 2.5% to 3.5% full year GDP for 2013, this implies that the government is looking at 2H growth to be from 3.1% to 5% y/y.

This is quite strong growth but it's within UOB's forecast because of the reasons I talked about in my email to you yesterday. UOB's forecast of 3% full year GDP growth remains unchanged at this stage.