Singapore's economy probably expanded at the fastest pace in two years in the second quarter as a surging financial-services industry fueled the construction of offices and apartments.

The government's final report will show annualized growth of 12.4 percent, down from an initial July estimate of 12.8 percent, according to the median forecast of 12 economists in a Bloomberg survey. First-quarter growth was 8.5 percent. The trade ministry figures are due 08:00 A.M. in Singapore on Aug. 10.
Prime Minister Lee Hsien Loong's success in attracting companies like Citigroup Inc. and Friends Provident Plc to expand operations or set up new ones is spurring the property and construction markets. That's providing a buffer to slowing electronics output caused by a global inventory glut that has pushed down prices for memory chips and microprocessors.
“The economy is enjoying broad-based growth with construction contributing more after being a drag for many years,” said David Cohen, an economist at Action Economics in Singapore.
Singapore is doing nicely and there's a high probability growth this year will be stronger than the government's estimates.
From a year earlier, Singapore's economy probably expanded 8 percent in the second quarter after growing 6.4 percent in the previous three months, according to the median forecast of 13 economists in the Bloomberg survey. That is also lower than the government's earlier estimate of 8.2 percent.
The prime minister may release some growth figures when he makes a televised National Day message today. The country celebrates its 42nd year of independence tomorrow.
Economists reduced their expectations for growth for the April-June quarter as reports showed industrial production declined in June, and exports posted the smallest gain in 21 months. The government cut its 2007 export growth forecast last month after electronics shipments fell for the eighth time in nine months.
Manufacturing rose 8.3 percent in the second quarter, slower than the government's July 10 estimate of 10.2 percent, the Economic Development Board said on July 26. The lower forecast indicated production contributed less to the economy's expansion last quarter, economists said, which accounted for the difference from the initial growth estimate.
Singapore's economy may accelerate in the second half as manufacturing and services industries expand, the central bank said last month. Information technology-related industries will rebound, providing an additional boost to growth, it said.
The global electronics sector seems to be picking up a little bit and that should help turn around the performance in Singapore as well,'' Cohen said. The island's construction industry has burgeoned in the past year as demand for office space and private homes surged. About S$7.6 billion ($5 billion) of contracts were awarded in the first five months of 2007, and the government expects the amount to rise to as much as S$22 billion this year.
Real estate developers are paying record amounts for aging condominiums in prime districts, before tearing them down and building new ones. There were 48 collective sales of older estates in the first half of 2007 totaling S$9.48 billion, according to real estate consultant Knight Frank.
Private residential prices rose 8.3 percent in the second quarter, the fastest pace in almost eight years. SC Global Development Ltd., a builder of luxury apartments in Singapore, in June sold 21 units at its The Marq project for between S$11 million and S$31 million each.
The developers are also demolishing old commercial properties or revamping existing ones to maximize space as office vacancies drop to the lowest in over a decade. Companies are expanding their businesses or starting new operations as the government promotes the city as a financial hub.
Citigroup, the world's biggest financial services company, opened a prime brokerage office in Singapore in March to compete for a larger share of Asia's growing hedge-fund services business. The U.K.'s Friends Provident, a 175-year-old insurer and money manager, started its operations in the city last month by offering insurance-linked investment products.
Higher job creation and wage increases is also encouraging consumer spending, while record tourist arrivals are boosting revenue at hotels, restaurants and department stores.
The island's unemployment rate fell in the second quarter to the lowest in six years as companies increased payrolls to keep pace with a strengthening economy. The city-state added 61,900 new jobs last quarter following the addition of 49,400 positions between January and March.
More than 4.9 million tourists have visited Singapore this year, which is adding attractions such as casinos and increasing convention space to encourage companies to hold more trade shows and exhibitions. (Source: Bloomberg