Uncertainty remains in global economic rally
The global economic outlook has brightened, but Singapore's prospects in the second half of 2017 are still far from certain.
An export rally lifted demand for Singapore's shipments earlier in the year and ignited hope that the economy might be on the cusp of a strong rebound.
But this hope is now giving way to uncertainty, with the uptick in activity limited thus far to certain sectors and economists expecting growth to remain patchy.
It remains to be seen whether the trade-driven lift can be sustained, economists say.
The Ministry of Trade and Industry expects this year's economic growth to come in above 2 per cent.
That sits at the higher end of its 1 per cent to 3 per cent forecast for the full year and surpasses last year's modest 2 per cent pace.
"The question being asked now is whether growth momentum is slowing globally and in Asia as we head into the second half," said CIMB Private Bank economist Song Seng Wun.
The outlook is improving in developed economies, including the US and Europe, said OCBC economist Selena Ling.
In addition, risks like US President Donald Trump's anti-trade rhetoric and the expected fallout from Brexit have not been as bad as some expected.
The more sanguine global outlook has been a boon for Singapore exporters, especially electronics manufacturers.
Electronics non-oil domestic exports surged 23.3 per cent in May, their seventh consecutive month of expansion.
Non-oil re-exports - a proxy for wholesale trade services - surged by 14.3 per cent in May from a year earlier, suggesting that trade-related services are also getting a lift from the broader rebound in regional trade activity.
However, other sectors are doing less well, especially those dependent on local demand.
The construction sector shrank 1.4 per cent in the first three months of the year, extending a 2.8 per cent contraction in the preceding quarter.
Within manufacturing, the transport engineering segment remains weighed down by low oil prices.
This uneven growth is expected to remain a key concern in the second half of the year.