Singapore GDP spurt boosts hopes of revival
Singapore, July 14, 2009
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, 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, beginning with Goldman Sachs later on Tuesday.
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 and a bellwether for global trade, GDP rose at an annualised and seasonally-adjusted rate of 20.4 percent, 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 growth was driven by the volatile pharmaceuticals sector and doubts remained about 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 percent year-on-year from 6.1 percent in the first quarter, still a shade below the 8 percent level the Chinese government considers necessary to create enough jobs for its population.
Another test of the strength of the nascent recovery will come with US retail sales data at 1230 GMT, while in Germany the influential ZEW think tank's monthly survey on economic sentiment is due at 0900 GMT.
ZEW president Wolfgang Franz said Europe's biggest economy was unlikely to seen significant growth until 2010. "What we're likely to see in the next few months is a kind of undulating economy with gross domestic product growth of round about nil -- at times slightly above, at times slightly below," Franz told German television station ARD.
Signs began emerging around late March that the deepest global recession since World War Two 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, speakin