Economic growth likely slowed further to 6.2 percent in the second quarter from 6.4 percent in the first quarter due mainly to high base effects, DBS Bank of Singapore said Monday.
“Expect 2Q17 GDP growth to come in at 6.2 percent year-on-year, a further moderation from the 6.4 percent seen in the previous quarter. The normalization in numbers is just as expected, given the high base from an election year in 2016,” it said.
“Expect private consumption growth to have eased further to around 5.2 percent from the 5.7 percent recorded in 1Q17. This should be hardly surprising, given the moderation in retail sales as well as the slight fall in imports of consumer goods during 2Q17,” the bank said.
The government is set to release the second-quarter GDP data on Thursday.
The economy grew at a sluggish pace of 6.4 percent in the first three months from a 6.8-percent expansion a year ago, due to anemic spending that was comparatively robust in the same period last year.
But DBS said going by the government’s monthly budget expenditure, it was clear spending had picked up pace in second quarter. Budget expenditure rose more than 13 percent in the second quarter, up from just a mere 4 percent in the preceding quarter.
The bank said it was hard to take the second-quarter data as a good gauge of the strength of the economy, adding what might appear to be significantly softer domestic demand in the period was likely the result of the high base effects from last year elections.
“For example, even if import growth were to come in the single-digits, as opposed to the 15 percent in 1Q 17, let’s not forget the record-high 33 percent recorded in 2Q 16. At this juncture, unless we are to see a sharp slide in consumption growth in second half, full-year GDP growth is still likely to come in at circa 6.4 percent,” the bank said.
Moody’s Analytics, a division of Moody’s Corp., earlier said economic growth in the second quarter likely accelerated to 6.8 percent from 6.4 percent a quarter ago, driven mainly by stronger exports particularly electronics products.