Singapore's Q1 GDP growth may be revised upwards after strong factory data, say analysts

Singapore's first quarter economic growth figures may be revised upwards, due to better-than-expected industrial production performance in March.
Singapore's first quarter economic growth figures may be revised upwards, due to better-than-expected industrial production performance in March.PHOTO: REUTERS

SINGAPORE (REUTERS) - Singapore's first quarter economic growth figures may be revised upwards, due to better-than-expected industrial production performance in March, thanks to a continued surge in the electronics sector.

Manufacturing output in March rose 10.2 per cent from a year earlier, data from the Singapore Economic Development Board showed, exceeding the median forecast in a Reuters survey of a 7.1 per cent expansion on-year.

Industrial production on a month-on-month and seasonally adjusted basis also rose more than expected at 5.0 per cent in March. The median forecast was for a rise of 0.9 per cent.

"I'm cautiously optimistic... we are expecting the first half to look quite good. On the longer side of things, there will be some support as some (electronics) manufacturers will have new models, but it may not happen in a big way," said UOB economist Alvin Liew.

The electronics sector continued to shine in March, growing at 37.7 per cent from the previous year. This is brought about by growing demand for the city-state's tech products, analysts say, particularly in semiconductors, which output grew by more than half.

This comes after industrial output rose at the same rate in February, at a revised 10.2 per cent on-year. On a month-on-month seasonally adjusted basis, however, industrial output contracted a revised 5.8 per cent.

Despite strong electronics exports, some analysts believe industrial production will begin to moderate in coming months because of lower regional demand.

Singapore has been among a number of export-reliant Asian economies to benefit from a general uptick in global demand in recent months, with the city-state enjoying strong sales of its tech products but analysts say that the tech production cycle is starting to mature.

The economy has struggled over the past two years. In the first quarter of this year, gross domestic product shrank 1.9 per cent from the previous three months and grew 2.5 per cent from a year earlier.

However, March's manufacturing output numbers point to an upward revision in first quarter GDP, analysts say.

"It won't go beyond 3 per cent but if other sectors remain stable, we are looking at a revision of around 2.7 per cent year on year", Liew said.

ANZ economist Ng Wei Wen also tipped a revised 2.7 per cent GDP growth for first quarter, assuing estimates for the services and construction sectors remain unchanged. He said manufacturing growth for the first quarter could be revised higher to 7.8 per cent year on year from the 6.6 per cent advance estimate.

With additional information from The Straits Times