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Singapore’s Economy Stages Comeback In Quarter

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HONG KONG — Singapore’s economy staged an unexpectedly vigorous bounce-back during the second quarter of this year, prompting an official revision of the full-year growth forecast and providing a piece of good news for Asia’s export-dependent economies.

On Tuesday, data released by the government showed Singapore’s economy grew at an annualized rate of 20.4 percent from April through June, compared with the previous three months, much more than economists had projected and a vast improvement over the double-digit declines recorded in previous quarters.

Singapore — like Hong Kong, Taiwan and Malaysia — is a small and open economy and an Asian financial hub that has been badly battered by the international financial and global turmoil that followed the collapse of Lehman Brothers last year.

Given the still-precarious state of the global economy, economists were still cautious about Singapore’s outlook. As in much of the rest of Asia, only a slow recovery is expected.

“That the result was less dire than forecast is a plus,†said Patrick Bennett, an economist at Société Générale in Hong Kong. But he warned that there were “plenty of challenges ahead for the Singapore economy.â€

Compared with the same quarter last year, gross domestic product fell 3.7 percent, which was a less severe contraction than economists had forecast.

As a result, the government said it now expected the economy to shrink between 4 percent and 6 percent, rather than as much as 9 percent.

The data and less-grim forecast illustrate the mixed picture around the world, as the global economy has at least stopped worsening. Still, it has yet to show signs of a significant or sustained rebound.

The Singapore report also cemented expectations that much of Asia would emerge from the crisis faster than other regions, thanks largely to the fact that Asian banks steered clear of the complex financial instruments that brought several European and American institutions to their knees.

Debt levels are also lower, allowing governments to introduce major stimulus packages. Singapore’s has been among the largest in the region, relative to the size of its economy.

Elsewhere on Tuesday, Australia reported that a key measure of business conditions jumped in June. But in Germany, an investor confidence index published by the ZEW economic institute unexpectedly dropped in July.

Many economists caution that much of the recent stabilization could be simply the result of companies’ replenishing the inventories they ran down amid the turmoil of recent months — in which case, the improvement could be temporary and not show a sustained recovery in consumer demand.

Reflecting this uncertainty, Singapore’s Ministry of Trade and Industry on Tuesday accompanied its improved G.D.P. outlook with plenty of warnings.

So companies restocking or sustainable recovery??

Tough call.

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what? a stimulus produces a stimulus?

definately sus.

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