Economy contracts by almost 8% quarter on quarter

Based on advance estimates, the economy grew by 0.5 per cent on a year-on-year basis, down from the 9.3 per cent growth in the previous quarter. On a seasonally-adjusted quarter-on-quarter annualised basis, the economy contracted by 7.8 per cent, compared to the 27.2 per cent expansion in the previous quarter.

The moderation in growth reflected a slowdown across many sectors. On a year-on-year basis, the manufacturing sector declined by 5.5 per cent in the second quarter of 2011, after expanding by 16.4 per cent in the previous quarter. On a sequential basis, the sector contracted by an annualised rate of 22.5 per cent, a sharp reversal from the strong growth of 96.6 per cent in the preceding quarter. This largely reflected a decline in the biomedical manufacturing cluster, as some companies switched to producing a different value-mix of active pharmaceutical ingredients during the quarter. Output in the electronics cluster also fell, partly due to an easing in global demand for semiconductor chips.

The construction sector grew by 1.6 per cent on a year-on-year basis in the second quarter of 2011, following growth of 2.4 per cent in the preceding quarter. The sector also posted a second consecutive quarter of growth on a sequential basis, at 13.8 per cent, supported by increasing construction activities in the industrial building segment.

Growth in the services producing industries moderated. Services producing industries grew by 3.3 per cent on a year-on-year basis, compared to the 7.6 per cent growth in the preceding quarter. On a sequential basis, the services producing industries declined by an annualised rate of 2.9 per cent, following the growth of 10.3 per cent in the preceding quarter. This was largely due to declines in the wholesale & retail trade and financial services sectors. The former was negatively affected by weaker trade flows during the quarter, while the latter was dragged down by a fall in stock trading activities. In contrast, tourism-related sectors such as hotels & restaurants continued to register healthy growth due to strong visitor inflows.