An elevated view shows the construction taking place at Marina Bay Sands Integrated Resort in Singapore.

Singapore said Tuesday its economy grew for the first time in a year in the second quarter, suggesting the city is emerging from its worst recession and offering hope for other battered Asian economies.

A Dow Jones Newswires poll of 10 analysts had tipped an average 14.1 percent economic expansion. It was the first quarter-on-quarter growth in five quarters.

Gross domestic product (GDP) is now expected to contract 4-6 percent for the year, better than an earlier projection of 6-9 percent, but the ministry warned that any recovery would be weak due to the fragile global economy.

Trade-driven Singapore last sank into a recession in 2001 when the economy shrank 2.4 percent, its worst slump since gaining statehood in 1965.

It became the first Asian economy to slip into recession in the second half of last year after a financial and economic crisis that started in the United States hit demand for its exports.

Tuesday’s data meant that Singapore is the first of the Asian countries hit by recession to release statistics pointing to a recovery.

Compared with the previous year, however, output in the June quarter was down 3.7 percent, indicating that any recovery would be fragile.

“The economy is growing again,” said David Cohen, an economist with research house Action Economics.

“Growth won’t be very strong but it should remain in an upward trajectory,” he told AFP.

Tuesday’s data compare with a 14.6 percent quarter on quarter contraction in the three months to March.

DBS Group called it a “stunning turnaround” in line with its forecast.

Singapore shares closed 1.94 percent higher partly on the GDP news.

CIMB-GK Research economist Song Seng Wun said the June quarter rebound boosted hopes that the worst is also over for China, South Korea, Hong Kong, Taiwan and other Asian economies affected by the global crisis.

These economies are expected to report on their second quarter performances in the next few weeks.

“Because Singapore has an open economy and has the highest exports to GDP ratio, its performance reflects any improvement or deterioration in global demand,” Song said.

South Korea’s expected recovery could ride on the back of firmer orders for its gadgets like mobile phones and flat screen panels, he said.

Action Economics’ Cohen predicted the Singapore data “will be the first in a series of upbeat GDP reports for the second quarter from Asian economies.”

“Maybe this will provide some reassurance to the markets which have been jittery in the last few weeks about the sustainability of the recovery. It shows that Asian economies have turned the corner in the second quarter.”

Song said the question for Asia is whether the rebound will be sustained.

He noted that leading industrialized countries make up half of the world economy and many of them are still reeling from the recession, limiting their demand for Asia-made goods.

Singapore’s trade ministry also cautioned that “the outlook for the rest of the year remains largely unchanged: of a weak recovery susceptible to downside risks.”

While the key manufacturing sector contracted by 1.5 percent in the June quarter, much narrower than the 24.3 percent shrinkage in the previous three months due to the spike in pharmaceuticals and electronics, the services sector was down 5.1 percent, it said.

Rising unemployment and reduced consumer spending in major export markets such as the US and Europe reflected the continued weakness in the global economy, the ministry noted.

Source: AFP