Latest GDP data and MAS' policy announcement: Analysts' take

SINGAPORE - The Singapore economy grew 2.1 per cent in the first quarter of this year, based on advance estimates from the Ministry of Trade and Industry (MTI) on Tuesday.

The Monetary Authority of Singapore (MAS) also announced that will maintain its policy of a modest and gradual appreciation of the Singdollar.

This is what some economists are saying about the latest data.

Selena Ling, OCBC:

"The external environment remains characterized by a multi-track recovery, led by the US economy, while the Eurozone and Japan are showing tentative signs of a turnaround amid monetary easing. China is still slowing but market speculation of further policy easing to support growth is increasing.

We expect a modest manufacturing pickup in the second quarter, but the sector is unlikely to drive growth this year."

Michael Wan, Credit Suisse:

"While there continue to be near-term headwinds on growth, given higher interest rates and soft property market activity, we continue to see growth picking up in the second half of the year for two key reasons.

First, global growth is expected to improve. Our global team sees economic growth in both Europe and Japan improving this year, while activity in the US should pick up from the second quarter

Secondly, stronger government spending on infrastructure, for instance on projects such as the Changi Airport expansion and building of MRT lines, should cushion the construction sector from the weak property market."

Daniel Martin, Capital Economics:

"Given the MAS's lingering concerns about medium term inflation prospects, it seems safe to say that it will not be loosening policy again any time soon. And by the time of its next scheduled policy meeting in October, inflation will be creeping back up and the global economy should have gained a stronger footing.

In many ways though, the most important decisions that will affect monetary conditions in Singapore over the coming years will not be made by the MAS, but by the US Fed. By operating an exchange rate targeting framework, the MAS sacrifices control of local interest rates, which tend to track the US Fed funds rate reasonably closely.

Already, local interbank rates have started to rise ahead of expected hikes by the US Fed later in the year. Further increases in local rates are likely to lie ahead and will serve to cool credit growth even further."