Singapore: The republic's economy grew 5.2% in the second quarter this year, from 2.7% in the first, mainly due to an expansion in biomedical output and robust performance in key services sectors such as wholesale and retail trade, and financial services.
The Trade and Industry Ministry said that during the period, the growth momentum on an annualised quarter-on-quarter basis accelerated to 18% compared with a contraction of 4.6% in the first quarter.
In the first half of 2005, the Singapore economy grew by 4% due to a better performance in the second quarter, the ministry said in a statement.
In view of the improved outlook, the ministry narrowed this year's gross domestic product (GDP) growth forecast to between 3.5% and 4.5%, from between 2.5% and 4.5%.
Manufacturing saw an increase of 5.9% in output, up from 3.4% in the first quarter, with recovery in biomedical production, and stronger showing in precision engineering and transport engineering contributed to the better performance.
Electronics growth came in at 4.4% from 11% due to declines in the semiconductors and computer peripherals segment but biomedical reversed a fall of 18.3% in the first quarter to grow by 2.9%.
Although the construction sector fell by 0.5% in the second quarter, it is still an improvement over the decline of 5.6% in the first.
The outlook for the second half of the year had improved, the ministry said, adding that continued growth in the G3 economies, a tentative recovery in the global electronics industry, limited impact from higher oil prices and stronger domestic forward-looking indicators, together signalled better prospects in the next six months.
Oil prices are likely to remain high in the near future, but its impact is expected to be tempered, according to the ministry. Unlike the oil shocks of the 1970s and the 1980s, which were the result of abrupt supply disruptions, current high oil prices are due to strong growth in two of Singapore's major export markets the United States and China.
As long as high oil prices are the result of strong demand, the impact on Singapore's economic growth should be limited, it said.
There were also tentative signs of a recovery in the global electronic industry, the ministry said.
On the supply side, semiconductor vendors have reduced inventories and exercised restraint in capital spending. Demand for semiconductor chips is expected to pick up in the second half of the year, particularly in niche areas such as consumer electronics and infocommunications products, it said. Bernama
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