Singapore is a small country in Asia with a population of more than 5 million people and a GDP of more than $330 billion. It is one of the most developed country in the region. Its democratic model and strong judiciary, coupled with its close proximity to China makes it an attractive country to investors. As a result, while it has fewer resources, it has emerged as one of the fastest growing economies in the world.
Today, the country released its first reading of the second quarter GDP number. Data from the Ministry of Trade and Industry showed that the first preliminary reading of the economy, the country expanded by just 0.1% year on year. This was significantly lower than the 1.1% growth that investors were expecting. This was the slowest economic growth for the country since 2009. It was also lower than the final reading of the first quarter growth of 1.1%.
On a MoM basis, things looked worse. In the quarter, the economy shrank by -3.4%, which was much lower than the expected growth of 0.1%. In the previous quarter, the economy had expanded by 3.8%. This was attributed to the weak manufacturing sector, especially the manufacture of electronics and precision engineering, which declined by 3.8%. This is ironic because Singapore has been seen as a major beneficiary as most manufacturers move from China to other countries in the region.
Other recent economic data has not been bad. The unemployment rate remains at 2.1%, making it one of the best in the world. The inflation data of 1.3% remains at below the Singapore central bank target of 2%.
Meanwhile, data from the statistics office showed that retail sales for the month of May continued to weaken. On a MoM basis, the retail sales declined by -2.1%, which was lower than the previous gain of 0.2%. On a MoM basis, the retail sales declined by -2.2%, which was lower than the expected -0.6%.
The USD/SGD pair has been moving upwards this week. The pair has moved from a low of 1.3543 to today’s high of 1.3590. On the chart below, this price is below the double top level of 1.3626. The pair is trading along the 38.2% Fibonacci Retracement level. The RSI has moved from the oversold level to almost 60 while the pair is trading above the 21-day and 42-day moving averages. The pair could continue moving higher to the 50% Fibonacci Retracement level of 1.3600.