In the second quarter of 2024, Singapore’s economy expanded by 2.9% year-on-year, slightly lower than the revised growth rate of 3% from the previous quarter, as indicated by advance estimates from the Ministry of Trade and Industry (MTI) on July 12. On a seasonally adjusted basis, GDP increased by 0.4%, an uptick from the revised 0.3% growth observed in the prior quarter. This growth outpaced economists’ predictions of 2.7% for year-on-year performance, while the quarterly figures met forecasts.

The positive economic trend has led several banks, including OCBC, DBS, and Maybank, to adjust their GDP growth predictions upward. The manufacturing sector rebounded with a year-on-year growth of 0.5% in Q2, contrasting with a decline of 1.7% in the preceding quarter. All manufacturing clusters saw production increases, aside from biomedical manufacturing and precision engineering.

Maybank analysts noted the unexpected drop in the biomedical sector, suggesting a normalization in the latter half of the year. They anticipate the electronics sector, which constitutes nearly half of overall manufacturing output, to drive recovery. DBS economist Chua Han Teng echoed this sentiment, observing a rebound in electronics following a correction earlier in the year.

On a quarterly basis, manufacturing rose 0.6%, recovering from a significant 5.3% drop in Q1. Construction output also showed robust growth, climbing 4.3% year-on-year, up from 4.1% previously. MTI reported that growth was bolstered by a rise in public-sector construction activities, with the sector expanding 2.4% quarter-on-quarter, a turnaround from a 1.9% contraction in Q1.

In contrast, services growth decelerated to 3.3% in Q2, down from 4.3% in Q1. Sequentially, services growth remained flat, falling from 2.2% in the previous quarter. The wholesale and retail trade, alongside transportation and storage sectors, collectively grew 2.5% year-on-year, a decline from 3.9% growth in Q1, with a sequential increase of 0.7%, down from 2.7%.

A specific group of service sectors—information and communications, finance and insurance, and professional services—expanded by 5.6% year-on-year, slightly decreasing from 5.7% in Q1, while sequential growth rebounded to 1.4% from a 2.8% decline in the prior quarter. The remaining service sectors, including accommodation and food services, real estate, and administrative support, registered a 1.9% year-on-year increase, slower than the 3% growth in the previous quarter. MTI highlighted that all sectors, except real estate and food services, showed positive expansion.

DBS’ Chua suggested that the slowdown in Q2 was expected, likely reflecting diminished activity in tourism-linked sectors. He noted that the decline in food services and a slower pace of growth in accommodation stemmed from the one-time boost from high-profile concerts in Q1, which did not recur in Q2, leading to reduced foreign tourist arrivals and hotel occupancy.