SINGAPORE: Singapore's economy grew at a slightly faster pace in the first quarter that initially estimated, as factory activity remained robust, while an improvement in global demand prompted the government to upgrade its 2018 growth forecast.
The economy grew 1.7 percent in the January-March quarter from the previous three months on an annualised and seasonally adjusted basis thanks to a slight upward revision in the services sector, revised final figures from the Ministry of Trade and Industry (MTI) showed on Thursday.
That was slower than the 2.1 percent expansion in the last quarter of 2017, but faster than the government's initial first quarter estimate, released on April 13, of 1.4 percent growth.
Despite the moderation in growth, the better than expected numbers prompted MTI to revise its full year growth forecast to 2.5 to 3.5 percent from the 1.5 to 3.5 percent announced previously.
"It shows that they're a little bit confident going forward," OCBC bank chief economist, Selena Ling said, adding that the revision is in line with Singapore's central bank's monetary policy change in April, when it tightened for the first time in six years.
Gross domestic product grew 4.4 percent in the first quarter from a year earlier, higher than the advance estimate of 4.3 percent growth.
The median forecast of 11 analysts in a Reuters poll predicted 1.4 percent quarter-on-quarter growth and a 4.3 percent annual expansion.
The expansion has been supported largely by the city-state's manufacturing sector, especially electronics, although the upward revision was mainly due to an improvement in the services sector numbers.
But as growth in Singapore's factory output starts to moderate and exports of electronics decline, analysts have started to question the outlook for output in the city-state.
Manufacturing and exports of electronics were one of Singapore's main drivers of growth last year, leading to a 3.6 percent rise in GDP in 2017 -- the fastest pace in three years.
The MTI repeated the threat of protectionist policies by the United States and the rise in global interest rates as clouding the outlook for growth.
Despite the risks, analysts say the resilience seen in economic growth keeps alive the prospect of another central bank tightening this year.
"If growth continues to improve gradually, or hold up the way it is doing right now, unless something adverse happens of the external front, are very likely on course for further normalisation in October," Brian Tan, economist, Nomura. - Reuters
Bernama meanwhile reported:
Singapore's economy grew by 4.4 per cent on a year-on-year basis in the first quarter (Q118), higher than the 3.6 per cent recorded in the previous quarter.
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 1.7 per cent, moderating from the 2.1 per cent growth in the preceding quarter.
In releasing the latest economic figures, the Ministry of Trade and Industry (MTI) expects the republic's Gross Domestic Product (GDP) growth for 2018 to come in at “2.5 to 3.5 per cent”.
This is after taking into account the strong performance of the Singapore economy in the first quarter and the slightly improved external demand outlook for the country.
The manufacturing sector grew by 9.8 per cent year-on-year, extending the 4.8 per cent growth in the previous quarter.
The sector's growth was primarily driven by the electronics, precision engineering and chemicals clusters, which expanded 19.2 per cent, 14.0 per cent and 10.0 per cent respectively.
The construction sector contracted by 5.0 per cent year-on-year - the same pace of decline as in the previous quarter.
Construction output was weighed down by continued weakness in both the public and private sector construction activities, said the Ministry.
The wholesale and retail trade sector expanded by 3.0 per cent year-on-year, unchanged from the growth recorded in the previous quarter.
Growth was driven by the wholesale trade segment, which was in turn supported by an increase in the wholesale sales volume of petroleum products.
On the other hand, the retail trade segment contracted, weighed down by a fall in the volume of motor vehicle sales.
Growth in the transportation and storage sector came in at 2.8 per cent year-on-year,moderating from the 5.3 per cent in the previous quarter.
According to the MTI, the water and air transport segments were the main drivers of the sector's growth, given the healthy expansions in container throughput and air passengers handled respectively.
The accommodation and food services sector grew by 2.0 per cent year-on-year, slowing from the 2.9 per cent growth in in the preceding quarter.
Growth was driven by the accommodation segment, which expanded on the back of higher gross lettings at gazetted hotels in line with the rise in visitor arrivals.
On the other hand, the food services segment contracted, weighed down by a fall in sales volume at restaurants, food caterers and other eating places.
The MTI said the information and communications sector expanded by 5.7 per cent year-on-year, easing from the 6.0 per cent growth in the previous quarter.
The sector's growth was supported by the IT and information services and telecommunications segments.
Growth in the finance and insurance sector accelerated to 9.1 per cent year-on-year, from 6.3 per cent in the previous quarter.
The sector's strong performance was due to robust growth in the fund management, financial intermediation and insurance segments.
The business services sector grew by 2.8 per cent year-on-year, faster than the 0.4 per cent growth in the preceding quarter.
Growth was supported by the professional services and “others” segments, even as the contraction in the real estate segment eased.
The “other services industries” expanded by 1.9 per cent year-on-year, slower than the 2.7 per cent growth in the preceding quarter.
The sector's growth was primarily supported by the arts, entertainment and recreation and education, health and social services segments.
On economic outlook for 2018, the MTI said the pace of growth in the Singapore economy is expected to remain firm in 2018, with growth supported primarily by outward-oriented sectors.
In particular, the manufacturing sector is likely to continue to expand on the back of sustained growth in the electronics and precision engineering clusters, albeit at a more moderate pace as compared to 2017.
Likewise, outward-oriented services sectors such as finance and insurance, transportation and storage and wholesale trade are projected to continue to benefit from healthy external demand. - Bernama