Insight - High Q2 GDP growth: Beware the base effect

Lee Heng Guie: We maintain our 2021 GDP estimate at 4%.

THE upside surprise in the second quarter (Q2) gross domestic product (GDP) growth of 16.1% year-on-year (y-o-y) versus consensus estimate of 13.4%, bodes well for the full year growth estimate, but what is crucial to watch are the sequential third and fourth quarters of 2021.

Last year’s favourable low base effect due to the lockdown lifted GDP figures in Q2; but caveats about the transition to safer reopening of the economy under a four-phase National Recovery Plan and the worsening Covid-19 situation still apply.