Opening Remarks by PS Mrs Ow Foong Pheng for 2Q13 Economic Survey of Singapore
Opening Remarks
1 Good morning and welcome to MTI.
2 Details of Singapore’s economic performance for the second quarter and the growth outlook for 2013 are contained in the press release. Let me highlight a few key points.
3 Singapore’s GDP growth improved significantly in the second quarter of 2013.
- On a year-on-year basis, GDP grew by 3.8 per cent in the second quarter, compared to 0.2 per cent in the previous quarter.
- On a quarter-on-quarter basis, the economy grew at an annualised rate of 15.5 per cent, significantly higher than the 1.7 per cent growth in the previous quarter.
- The acceleration in the quarter-on-quarter growth momentum was mainly due to robust growth in the manufacturing, wholesale & retail trade, transportation & storage, and finance & insurance sectors.
4 While growth in the key advanced economies came in slightly weaker than expected in the first half of 2013, improvements in key leading indicators suggest a slight pickup in global growth over the next two quarters.
- In the US, the economy is likely to improve modestly, supported mainly by private domestic demand.
- While the Eurozone is expected to remain in recession in 2013, improving sentiments and a rising Composite Purchasing Managers Index suggest a potential easing of the recession in the coming months.
- In Asia, the growth outlook for China looks fragile as recent policies to rein in credit growth could potentially weigh on investments. On the other hand, the Japanese economy is expected to grow at a faster pace in 2013, due to support from accommodative fiscal and monetary policies. Growth in the ASEAN economies is likely to be modest, supported by resilient domestic demand.
- While global economic growth is likely to improve gradually in the second half of 2013, downside risks remain. As China adjusts its policies to promote more sustainable growth, unintended consequences, such as an excessive tightening of liquidity, could lead to a sharper-than-expected slowdown. This could in turn have spill-over effects on other export-oriented Asian economies. Meanwhile, in the US, it remains unclear whether markets will adjust to the tapering of the quantitative easing programme in an orderly fashion.
5 Barring downside risks, the Singapore economy is expected to grow by 2.5 to 3.5 per cent in 2013.
- This represents an upgrade from the growth forecast of 1.0 to 3.0 per cent announced in May. The upgrade in our forecast takes into account the following considerations.
- First, alongside the expected gradual pick-up in global economic growth, externally-oriented sectors like manufacturing and transportation & storage are expected to provide support to growth in the Singapore economy. Notably, Singapore’s manufacturing Purchasing Managers’ Index (PMI) remained in the expansionary zone for the fifth consecutive month in July.
- Second, domestically-oriented sectors like construction and business services are likely to remain resilient and support growth in the second half of 2013.
6 Together with my panel members, I will now take your questions.