Advance estimates for Singapore's gross domestic product in the three months to June show the economy expanded by 0.3 percent on the quarter after contracting by 0.4 percent in the three months to March. GDP rose 0.7 percent on the year in the three months to June, up from the 0.4 percent increase recorded in the three months to March and matching the consensus forecast. Monthly PMI survey data also indicated stronger growth in the Singapore economy over this period.

The rebound in headline quarter-over-quarter growth in the three months to June reflects improved conditions across all major sectors of the economy. Manufacturing output contracted for the second consecutive quarter but at a less pronounced rate, falling 1.3 percent on the quarter after a previous decline of 4.5 percent. Service sector output rose 1.3 percent after advancing 0.4 percent previously, while construction activity rose 2.6 percent after a previous increase of 0.3 percent.

Officials at the Monetary Authority of Singapore left policy settings on hold at their semi-annual review mid-April. Officials advised then that they expected weaker global activity would weigh on external demand and that higher prices and interest rates would weigh on domestic demand. They forecast Singapore's GDP will grow by between 0.5 percent and 2.5 percent in 2023, down from 3.6 percent in 2022.

GDP refers to the aggregate value of the goods and services produced in the economic territory of Singapore. GDP estimates are compiled by the output, expenditure and income approaches. Output-based GDP refers to the sum of gross value added generated by economic activities in the domestic economy. Expenditure-based GDP refers to the sum of private consumption expenditure of households including non-profit institutions serving households, government consumption expenditure, gross capital formation and net exports of goods and services. Income-based GDP refers to the sum of incomes receivable by each institutional sector from the domestic production of goods and services which includes compensation of employees, gross operating surplus and taxes (less subsidies, if any) on production and on imports.

In order to compare the real value of output/expenditure over time, it is necessary to remove the effect of price changes. This is achieved by selecting the price structure of 2010 as the base according to which the goods and services in other years are re-valued. The resulting aggregates after adjustment for price changes are known as constant-price estimates.
The advance GDP estimates are computed largely from data in the first two months of the quarter (e.g. 1st Quarter is based on Jan and Feb; 2nd Quarter is based on Apr and May). They are intended as early estimates of GDP growth in the quarter, and are subject to revision when more comprehensive data become available.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.