Singapore's gross domestic product grew 2.5 percent year on year in the past quarter ending in June, it was revealed by The Ministry of Trade and Industry advanced estimates.
Much the same as the previous quarter, the GDP increase was led by the manufacturing sector, expanding by 8% in the second quarter of the year, extending its previous 8.5 percent growth.
This growth in manufacturing was supported mainly by the electronics and precision engineering clusters, which have seen strong expansions on the back of robust external demand for semiconductors.
According to HSBC economist Joseph Incalcaterra, Singapore remains bullish in this sector given the assumption of a strong rebound in industrial production.
"Within the advance GDP estimate, the ministry assumes a strong rebound in June IP of approximately 7.0 percent month-on-month seasonally-adjusted, according to our calculations, which brings us to Q2 growth of 8.0 percent," he said.
He added, "This is not impossible to achieve, particularly given the fact that semiconductor production is expected to remain strong as Asia's iPhone supply chain ramps up."
Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye said the construction sector continues to be the weakest link, contracting 5.6 percent following the previous quarter's 6.1 percent decline.
"The government may have added to the pain with another foreign worker levy hike in July for construction. Recent strong private sector property sales may help the construction sector closer to year-end," the two analysts said in a flash report.
On the other hand, the services producing industries recorded a 1.7 percent growth in the quarter, moving at a faster pace than the preceding quarter's 1.4 percent. The sector received a strong boost from the transportation & storage and business services sectors.
The Maybank Kim Eng analysts said services will also be supported by the finance & insurance and wholesale & trade sectors, given the rise in loans in the months of April and May.
Incalcaterra noted that Singapore continues to have a "two-speed economy", after months of endless upside data surprises.
"As such, we see little risk that growth exceeds the government's 2-3 percent forecast range," he said.