Singapore's economy grew at a better-than-expected pace in the second quarter and the government raised the city state's outlook for the year on expectations for a gradual pickup in global growth in coming months.
The city state, whose economy is heavily reliant on trade, manufacturing and financial services, said gross domestic product expanded 15.5 per cent in the April-June quarter from the preceding quarter at a seasonally adjusted and annualised rate, faster than the advance estimate of 15.2 per cent.
The growth outlook for the year was also raised to 2.5 to 3.5 per cent from an earlier forecast of 1 to 3 per cent.
Prime Minister Lee Hsien Loong disclosed the upward revision in the growth outlook on Thursday, but the strength of some of the sectors in the second quarter still came as a surprise.
"Nobody expected the large upward revision in services," said Barclays economist Joey Chew. "I had expected a pullback in financial services after the strong first quarter and the market volatility in June."
Financial services expanded 9.2 per cent at an annualised quarter-on-quarter pace following a 51.2 per cent gain in the first quarter, while wholesale and retail trade surged 22.1 per cent even as trade agency International Enterprises Singapore said trade and exports growth this year was likely to be below its earlier forecasts.
The manufacturing sector grew 32.1 per cent at an annualised and seasonally adjusted pace, turning around from a 12.1 per cent contraction in the first quarter.
The strength in wholesale and retail trade services, despite the weak trade data so far this year, indicated domestic firms were increasingly serving exporters in other countries and trade did not have to be routed through the city state, Chew said.
The Singapore dollar rose slightly on the back of the stronger-than-expected GDP data and bullish outlook.
From a year ago, the economy expanded 3.8 per cent, faster than the preliminary estimate of 3.7 per cent reported earlier.