Singapore's economy leaps 20% in second quarter

SINGAPORE -- Singapore's economy grew for the first time in a year, soaring 20% in the second quarter, a sign Asia is emerging from the global slump.

Gross domestic product jumped an annualized, seasonally adjusted 20.4% in the three months through June from the previous quarter, the Trade and Industry Ministry said Tuesday in a statement. It said GDP fell 3.7% from year earlier after a 9.6% drop in the first quarter.

The ministry now expects the Southeast Asian city-state's economy to shrink between 4% and 6% this year, better than its previous forecast of a contraction between 6% and 9%.

"The Singapore economy is back and back with a vengeance," said Robert Prior-Wandesforde, senior Asia economist for HSBC in Singapore. "We very much doubt that today's Singapore GDP release will be the last in Asia to provide a sizable upside surprise."

The island's economy — which relies on exports, finance and tourism — had contracted the previous four quarters as it reeled from a collapse in global trade triggered by the financial crisis. An annualized 16.4% drop in the October-December period was the nadir of its deepest recession since splitting from Malaysia in 1965.

Singapore is the first major Asia economy to report second quarter GDP results. The second quarter GDP estimate was calculated using data largely from April and May and is subject to revision.

The ministry revised its first quarter economic figures to an annualized contraction of 12.7% from its initial estimate in April of a 19.7% contraction.

A surge in pharmaceutical production helped boost growth in the second quarter. Manufacturing fell 1.5% from a year ago compared to a 24% contraction in the first quarter. Construction rose 18% in the second quarter while services dropped 5.1%.

The ministry warned that the rebound in manufacturing could wane over the rest of the year.

"A sizable part of Singapore's manufacturing uptick came from a spike in biomedical manufacturing output and electronics inventory restocking, both of which may not be sustained," the ministry said.