Singapore economy grew 2.1% in Q1, beating expectations

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

Gross domestic product (GDP) for January to March was better than the 1.8 per cent growth rate forecast in a Reuters poll of economists.

The government has forecast full-year GDP growth of 2.0-4.0 per cent for this year. The economy grew 2.9 per cent in 2014.

MTI's flash estimates show the economy grew just 1.1 per cent from the previous three months on an annualised and seasonally adjusted basis, well below the 4.9 per cent quarter-on-quarter growth posted in the fourth quarter of 2014.

The manufacturing sector, which makes up a fifth of the economy, continued to be the main drag on growth. Factory output contracted 3.4 per cent over the same period in 2014, MTI said, following a 1.3 per cent decline in the fourth quarter of 2014.

The contraction was due to a fall in output in the transport engineering, electronics and precision engineering clusters. On a quarter-on-quarter basis, the sector contracted at an annualised rate of 2.3 per cent, extending the decline of 2.5 per cent in the preceding quarter.

The construction sector expanded by 3.3 per cent on a year-on-year basis in the first quarter, an improvement from the 0.7 per cent growth recorded in the preceding quarter. Growth was driven by a pick-up in private sector construction activities. On a quarter-on-quarter seasonally-adjusted annualised basis, growth in the sector accelerated to 13.8 per cent, from 2.2 per cent in the previous quarter.

Services producing industries grew by 3.1 per cent on a year-on-year basis in the first quarter, which is the same rate of growth as in the previous quarter.

Growth was supported by sectors such as wholesale & retail trade and business services. On a quarter-on-quarter basis, the services producing industries contracted at an annualised rate of 0.4 per cent, a reversal from the 7.8 per cent expansion in the preceding quarter.

MTI will release the preliminary GDP estimates for the first quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in May 2015.