SINGAPORE: For the first quarter of 2017, Singapore’s gross domestic product (GDP) expanded by 2.5 per cent compared to the same period a year ago, advance estimates from the Ministry of Trade and Industry (MTI) showed on Thursday (Apr 13).
That is higher than the median forecast of 2.4 per cent in a Reuters poll but marks a pullback from the previous quarter's 2.9 per cent growth.
On a quarter-on-quarter, seasonally adjusted annualised basis, the economy shrank 1.9 per cent during the January to March period, coming in line with expectations. While the annualised GDP reading is a stark reversal from the stellar 12.3 per cent rebound last quarter, economists said it is not a cause for worry.
“The quarter-on-quarter figure tends to be very volatile. A mild pullback shouldn’t be a surprise given the manufacturing surge last quarter,” said Maybank Kim Eng economist Chua Hak Bin, referring to the strong turnaround in factory output towards the end of 2016 which provided a surprise lift to the overall economy.
For the first three months of 2017, Singapore’s manufacturing sector contracted 6.6 per cent on a quarter-on-quarter seasonally adjusted annualised basis, reversing from the 39.8 per cent surge in the previous quarter.
On a year-on-year basis, the sector moderated from growth of 11.5 per cent to 6.6 per cent, which according to Dr Chua is still a “very healthy reading”.
In other sectors, construction continued to underperform by shrinking 1.1 per cent year-on-year in the first quarter, extending the 2.8 per cent decline in the previous quarter on the back of a slowdown in private sector construction activities. On a quarter-on-quarter seasonally adjusted annualised basis, the sector expanded by 5.4 per cent, accelerating from the 0.8 per cent growth in the preceding quarter.
The services producing industries grew 1.5 per cent on a year-on-year basis in the first quarter, improving from growth of 1.0 per cent in the previous quarter. However, on a quarter-on-quarter basis, the sector shrank at an annualised rate of 2.2 per cent after expanding 8.4 per cent in the last quarter.
Such mixed figures show that the local services sector, which accounts for about two-thirds of the economy, continues to “punch below its weight”, said Mizuho Bank’s senior economist Vishnu Varathan.
“Anything related to the property or banking sector is not in high gear and with these uncertain (components), any recovery is not going to come as quickly as what we’ve seen in the manufacturing sector,” he told Channel NewsAsia. “Services will remain a lingering drag.”
MTI will release the revised GDP data for the first quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in May.
The advance GDP estimates are computed largely from data in the first two months of the quarter - in this case, January and February. They are intended as an early indication of GDP growth in the quarter and are subject to revision when more comprehensive data becomes available.
Private sector economists had forecast Singapore’s first-quarter GDP to be 2.6 per cent, according to the latest quarterly survey by the Monetary Authority of Singapore (MAS) in March. For the full year, economists raised their GDP forecast to 2.3 per cent - a sharp hike from the previous estimation of 1.5 per cent.
That marks a pick-up from the 2.0 per cent growth recorded in 2016, and would be in the upper half of the Government's official 2017 GDP forecast range of 1 to 3 per cent.
Noting the growth figures, Prime Minister Lee Hsien Loong said that Singapore's economy "did quite well in Q1" and that the "outlook is encouraging".
In a Facebook post on Thursday evening, Mr Lee added that he met labour movement leaders during the week to find out "how things are in their different industries".
"They spoke about the challenges they are facing, the changes they foresee, and how they are helping workers cope," he wrote.
Mr Lee added that he will talk about Singapore's economy and job situation at the upcoming May Day Rally.