Singapore's economy performed better than estimated in the second quarter, but recovery will be "sluggish" on continued weak demand from the United States and Europe, the government said on Tuesday.
The trade-reliant economy expanded by a seasonally adjusted 20.7 percent in the June quarter from the previous three months, better than the estimated growth of 20.4 percent released last month.
The expansion marks Singapore's first quarter-on-quarter growth in five quarters and analysts said this suggests the economy is emerging from its worst recession since independence 44 years ago.
Second quarter performance was underpinned by strong gains in the manufacturing sector, where output climbed 49.5 percent compared with the previous quarter's contraction of 18.5 percent.
Manufacturing growth was powered by a surge in the production of active pharmaceutical ingredients used in medicines worldwide and a rise in inventory restocking in electronics.
The construction sector contributed to the growth, rising 32.7 percent on a resilient property market and the ongoing construction of two massive casino projects in the city-state, the ministry said.
Compared with the previous year, however, output in the June quarter was down 3.5 percent, indicating that any recovery would be fragile.
The trade ministry noted that industrial production and consumption in Singapore's key export markets such as the United States and Europe are still weak and unemployment remains high.
"Without a turnaround in these demand-led indicators, any economic recovery in the second half of the year will probably be sluggish and modest," the ministry said.
As a result, the government is maintaining its forecast for the economy to shrink between 4.0 and 6.0 percent this year.
Singapore became the first Asian economy to slip into recession in the second half of last year after a financial and economic crisis that started in the United States hit demand for its exports.