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Singapore roars out of recession, economy grows 20.4%

Singapore roars out of recession, economy grows 20.4%
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First Published: Tue, Jul 14 2009. 12 11 PM IST
Updated: Tue, Jul 14 2009. 12 11 PM IST
Singapore/Sydney: Singapore’s economy roared out of recession in the second quarter and a measure of Australian business conditions jumped in June, raising hopes Asia will lead a broader global recovery in the second half of 2009.
Asian shares rose on Tuesday, following a Wall Street rally sparked by positive comments on financial shares from an influential analyst ahead of a slew of bank earnings this week.
US Treasury secretary Timothy Geithner said he was optimistic that some leading economies could see growth this year and there was brighter news on closely watched British house prices, with a survey showing the slowest decline in two years.
In Singapore, the first Asian economy to report gross domestic product data for April-June, GDP rose at an annualised and seasonally-adjusted rate of 20.4%, the fastest rate in nearly six years and following four quarters of contraction.
The figures were better than analysts had forecast, but they warned that doubts remained over the sustainability of the rebound given that demand in major export markets such as the United States and Europe was still weak.
“This will be the first of a number of GDP reports that will show Asia is recovering after a weak first quarter,” said David Cohen of Action Economics.
“There is still a lot of uncertainty clouding the global outlook. The unemployment rate around the world is still edging higher, and the market is still nervous about how much momentum the recovery has.”
All eyes will now be on China, the driver of the global economy in recent years, which is expected to report its second quarter data on Thursday, the first major economy to do so.
Economists polled by Reuters think China’s growth accelerated to 7.5% year-on-year from 6.1% in the first quarter, still a shade below the 8% level the Chinese government considers necessary to create enough jobs for its population.
Signs began emerging around late March that the deepest global recession since World War II was starting to bottom out, driving a second-quarter rally in share markets.
But mixed data in recent weeks raised fears that stock prices had run ahead of the prospects of a sustained recovery in the second half of this year.
In Australia, one of the few developed economies to skirt recession, a measure of business conditions jumped to its best level in nine months in June, as a pick-up in sales and forward orders led to a record improvement in employment intentions.
The monthly survey of more than 400 firms from National Australia Bank showed its business gauge returned to the level held before the collapse of Lehman Brothers in September 2008.
“While the survey clearly points to much better-than-expected outcomes, the real question is whether this improvement can be sustained into the second half of 2009,” said NAB chief economist, Alan Oster. “Here we are less certain.”
The crisis that began nearly two years ago, when a US housing boom soured, accelerated last year after the collapse of Lehman, prompting governments around the world to pump trillions of dollars into bank bailouts and stimulus packages.
Geithner, speaking on a trip to Britain on Monday, said there was a good chance the United States and other economies would resume growth this year, rather than face a feared “double-dip” recession.
“We have a very powerful set of policies in place, coming on stream. I think there is a very good chance we will see the US economy and the world economy get back to recovery, get growing again, over the next few quarters,” he told reporters in London.
In Britain, hit hard by the recession because of its long credit and housing booms and reliance on financial services, a survey on Tuesday showed house prices in England and Wales fell at their slowest annual pace in almost two years last month.
The price outlook turned positive for the first time since May 2007, the Royal Institution of Chartered Surveyors’ survey showed.
Japan’s Nikkei average was up 2.2%, a welcome break from nine straight session of losses that had seen it sink 11% from its late-June peak. MSCI’s measure of stocks elsewhere in the Asia-Pacific gained 2.1%.
The rise tracked Monday’s 2.5% rally in the S&P 500 and owed much to a single banking analyst.
In comments to CNBC television, Meredith Whitney said US bank shares were in for at least a short-term gain of 15%.
Whitney, who in the past had been bearish, said major financials, including Bank of America and JPMorgan Chase & Co, which along with Goldman Sachs are scheduled to report results this week, could do well in the second quarter.
“Market sentiment has improved slightly compared to a few days ago, but we still need to see the actual numbers of US results,” said Mitsuru Sahara, chief manager at Bank of Tokyo-Mitsubishi UFJ.
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First Published: Tue, Jul 14 2009. 12 11 PM IST
More Topics: Singapore | Asia | China | Japan | US |