The data from Singapore is closely watched since the export-dependent economy is seen as an important indicator of global demand.

Singapore’s gross domestic product in the second quarter grew by an annualised 20.4 per cent, following four consecutive quarters of contraction, according to a flash estimate by the Ministry of Trade and Industry based on April and May data. It contracted by 3.7 per cent from a year ago.

The government said it now expected the economy to contract by 4-6 per cent for the full year against its previous estimate of a contraction of 6-9 per cent.

Manufacturing fell by 1.5 per cent last quarter from a year earlier, an improvement over a revised 24.3 per cent decline in the first quarter of 2009. It had benefited from increased output in the pharmaceuticals sector, which is highly volatile in terms of growth rates. Services declined by 5.1 per cent, while construction grew by 18.3 per cent.

The data led many private economists to predict that the Singaporean economy was likely to record positive year-on-year growth by the fourth quarter. HSBC said that it believed that Singapore’s recession was over as its predicted a strong V-shape recovery, with the economy expanding by 5.3 per cent in 2010.

”It’s typically the most open economies, like Singapore and Malaysia that crashed the most, which we think will see the greatest trade recovery kicking in,” said Robert Prior-Wandesforde, chief regional economist for HSBC in Singapore.

But a note of caution was sounded as the MTI said that ”underlying economic conditions remain weak.” Some economists expressed concerns that wild swings in pharmaceutical production might be distorting the economic data, when electronics manufacturing and the services sector had not recovered.

• The National Australia Bank monthly business survey of business conditions rose to the highest level in nine months, Elizabeth Fry reported in Sydney, suggesting the Australian economy could be turning the corner.

The survey showed that business conditions became significantly less negative in June, with the index improving 12 points to minus 2, the strongest result since last May.

It also showed that business confidence had improved further, moving to plus 3.5 points, the first positive reading since December 2007 and a sharp recovery from the record low of minus 31.6 at the beginning of the year.

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