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Singapore economy expands at record paceBy Justine Lau in Hong Kong

Published: July 14 2010 05:43 | Last updated: July 14 2010 09:20

Singapores economy grew at a record pace in the first half of the year, in the latest sign that

Asia is leading the global economic recovery.

The city state posted growth of 18.1 per cent in the first half of the year compared with the

The economy grew on the back of strong exports and tourism-related growth generated by the

opening of two casino resorts.

The very strong figures highlight the strong rebound in the region that we have seen across

Asia in Taiwan, Korea, China, Hong Kong, said David Cohen at Action Economics in

Singapore.

China will release figures on Thursday that are expected to show continued strong economic

growth. Australia meanwhile on Wednesday trimmed its forecasts for growth for the next 12

months and the year after by a quarter of a percentage point each, to 3 per cent and 3.75 per

cent respectively. The change, according to Stephen Walters, an economist with JPMorgan,was due to increased pessimism about domestic housing construction and a more cautious

view on global demand for commodities.

The Singaporean economy expanded at an annualised and seasonally-adjusted 26 per cent in

the second quarter from the previous three months. Compared with the same period last year,

it grew 19.3 per cent in the second quarter, the biggest rise since records began in 1975.

Growth in the second quarter was helped by exports to Europe, which surged 75 per cent in

June from a year before. Singapore also exported 39 per cent more goods to China and 50 per

cent more to Japan last month.

On the back of the latest figures, Singapore increased its forecast for economic growth for this

year to 13-15 per cent from an earlier projection of 7-9 per cent.

Singapore now expects exports to increase 17-19 per cent this year, up from its previous

forecast of 15-17 per cent, due to buoyant demand from China, Indonesia, Malaysia and other

Asian countries.

However, the government warned that growth in the second half would be more subdued in

the trade-dependent economy because of waning consumer confidence in the US and weak

domestic demand in Europe.

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Sluggish final demand in the US and EU has moderated industrial activ ities and lowered

expectations for manufacturing output in the Asian economies, said the ministry of trade and

industry.

Tim Condon, head of financial markets research at ING Financial Markets in Singapore, said

volatility in the pharmaceutical sector could affect performance in the second half. He said thesectors output, which accounts for about 4-5 per cent of the economy, had increased by about

850 per cent in the second quarter from the previous three months.

Additional reporting by Elizabeth Fry in Sydney

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