Singapore Q1 GDP likely to be revised higher on manufacturing boost, but outlook more clouded

Economists have estimated Singapore's median gross domestic product (GDP) growth to be at 2.7 per cent in the first quarter of 2017.
Economists have estimated Singapore's median gross domestic product (GDP) growth to be at 2.7 per cent in the first quarter of 2017.PHOTO: ST FILE

SINGAPORE (REUTERS) - Singapore's economy likely performed better than initially expected in the first quarter thanks to a surge in factory output, although the outlook is clouded by slowing exports to China, according to analysts surveyed by Reuters.

The median estimate by the 11 economists polled put gross domestic product (GDP) growth at 2.7 per cent in the January-March quarter from a year earlier.

That would be better than the official advance estimate of 2.5 per cent growth released last month.

On a seasonally adjusted, annualised basis, GDP probably contracted by 1 per cent in the January-March quarter, the poll showed, compared with the advance estimate of a 1.9 per cent contraction.

Get The Straits Times
newsletters in your inbox

Singapore's manufacturing output beat expectations in March, rising 10.2 per cent from a year earlier, making analysts revise upwards their first-quarter GDP forecasts, but weak export numbers in April cast a shadow on the outlook.

"We're on watch mode," said Mizuho Bank senior economist Vishnu Varathan, adding that he is not revising his full year GDP forecast. "We did see export numbers feeding into the story of moderation for the rest of the year. Q1 is not compelling enough for us to suggest suddenly the prospects are a lot more upbeat."

Other analysts doubt that the better than expected growth of the last two quarters can be sustained.

"We reckon that it will be challenging for the recent strength in exports and production to sustain in the second half of 2017," said ANZ economist Weiwen Ng.

He said Singapore could face headwinds due to its reliance on growth that was mostly driven by the electronics sector and by trade with China.

"We know that this recovery is externally driven by exports. The tech cycle is maturing and we saw that in the modest moderation in the electronic exports (in April)," Mr Ng said. "Exports are geographically and narrowly driven by China."

Singapore's non-oil domestic exports to China grew much slower in April at 10.9 per cent from a year earlier, compared with 45.5 per cent growth in March.