The global economic outlook has brightened this year, but Singapore's prospects in the second half of 2017 are still far from certain.
An export rally lifted demand for Singapore's shipments earlier in the year and ignited hope that the economy might be on the cusp of a strong rebound.
But this hope is now giving way to uncertainty, with the uptick in activity limited thus far to certain sectors and economists expecting growth to remain patchy.
It also remains to be seen whether the trade-driven lift can be sustained, economists say.
The Ministry of Trade and Industry expects this year's economic growth to come in above 2 per cent. That sits at the higher end of its 1 per cent to 3 per cent forecast for the full year and surpasses last year's modest 2 per cent pace.
"The question being asked now is whether growth momentum is slowing globally and in Asia as we head into the second half," said CIMB Private Bank economist Song Seng Wun. "If the labour market globally continues to hold up, then I'm cautiously optimistic. Growth might have peaked earlier in the year, but the moderation in momentum will still be fairly mild if consumers and businesses continue spending," he added.
"The numbers so far have been encouraging in terms of export momentum, but it's difficult to tell whether things will hold up."
The outlook is improving in developed economies, including the United States and Europe, said OCBC economist Selena Ling.
In addition, risks like US President Donald Trump's anti-trade rhetoric and the expected fallout from Brexit have not been as disastrous as some expected.
"The global growth engine is humming along smoothly but we could get some summer storms in the second half - for instance, if the US Federal Reserve hikes rates earlier and more aggressively than what markets have priced in," she said.
The more sanguine global outlook has been a boon for Singapore exporters, especially electronics manufacturers. Electronics non-oil domestic exports surged 23.3 per cent in May, their seventh consecutive month of expansion.
In addition, non-oil re-exports - a proxy for wholesale trade services - surged by 14.3 per cent in May from a year earlier, suggesting that trade-related services are also getting a lift from the broader rebound in regional trade activity.
While trade-related segments have boomed, other sectors have been doing less well, especially those dependent on local demand.
For instance, the construction sector shrank 1.4 per cent in the first three months of the year, extending a 2.8 per cent contraction in the preceding quarter, due to weakness in private sector building activities.
Even within manufacturing, the transport engineering segment - which includes oil and gas - remains weighed down by low oil prices. This uneven growth is expected to remain a key concern in the second half of the year. "We are still not seeing broad-based growth," said Mr Song.
He pointed to pockets of optimism outside manufacturing, including the opening of Changi Airport Terminal 4 as well as a pick-up in property market sentiment.
"But there's nothing to shout about as far as headline growth numbers are concerned," he added.
The ongoing impact of disruptive technologies on businesses also makes the picture more complex.
"While some jobs are disappearing, new ones are being created. Companies are also restructuring and adapting," said Mr Song. "It's becoming harder to make predictions."
On the whole, "sentiment on the ground is still relatively quiet and uncertain. Whether household or company, people are now more careful with their budgets", he added.
Still, some economists are optimistic. Maybank Kim Eng economist Chua Hak Bin noted earlier last month that while the recovery has been led by electronics manufacturing and trade-related services, it is likely to broaden out to other segments, including financial services, business services, and wholesale and retail trade.
"Even if manufacturing growth moderates from the breakneck pace seen in the early part of this year, other growth drivers should start kicking in," said Dr Chua.
