Singapore's Q2 GDP weaker than expected

Singapore released advance Q2 GDP this morning, came in softer than expected at 1.7% y/y (consensus: 2.4%). Q1 was revised up to 2.8% from 2.6% previously implying H1 growth of around 2.2%, says Commerzbank. 

On a quarterly basis, the economy contracted 4.6% q/q annualized vs +4.2% in Q1. The main drag came from the manufacturing sector which fell 4% y/y vs -2.7% in Q1 while the construction expanded 2.7% vs 2.1% in Q1. The services sector moderated to 3% from 4.2% previously. 

Overall, the weak Q2 report and benign outlook for external demand in H2 implies 2015 growth is likely to come in at the lower end of the government's projection of 2-4%, adds Commerzbank. The advance report is based on April-May data and the final report will be released in mid-August. For USD-SGD, it gained over 40 pips to 1.3610 after the weak GDP report. 

According to Commerzbank, "We continue to look for a supportive tone near term with a year-end target of 1.42 due to weak growth and prospects of a stronger USD backdrop."