Singapore’s GDP bounced back big-time in Q2, but don’t assume it will last

Singapore’s Q2 GDP was up 3.7% (pdf) compared with Q2 2012, based on advanced estimates from Singapore’s Ministry of Trade and Industry. That’s the biggest increase since 2011. The GDP grew an annualized 15.2% compared with the first quarter, after seasonal adjustments, far exceeding expectations, reports Reuters.

Here are the main takeaways:

• Manufacturing picked up, growing 1.1% in Q2 2012, compared with a 6.9% contraction in Q1 2013. The government attributed this to soaring trade in biomedical manufacturing and electronics clusters.
• Construction surged 5.6% compared with the same period last year. That’s still strong, though it’s down slightly from the 6.8%  growth in the first quarter.
• The rebound might not be sustainable. Singapore’s economy is highly dependent on trade, and as the state of the global economy has worsened, net exports have powered less and less of its growth (Q2 net exports have not yet been released):

The government has let the Singapore dollar weaken about 3% against the US dollar since the beginning of 2013, which has helped boost the competitiveness of its exports, which constitute a good portion of its manufacturing output. A weaker currency won’t be enough to power an export-led recovery through year’s end. The recovery depends more on demand from Asia and the US. On the upside, the economy is improving in Malaysia, Singapore’s biggest export market, after a dismal first quarter, as are the US’s economic prospects. But if China’s economy slows down dramatically, which looks increasingly likely, that could squash Singapore’s rebound.

As you can see in the chart above, the combined weight of China and Hong Kong would likely offset surges in demand from Malaysia and the US.