Singapore’s economy grew by 5.1 per cent in the first quarter of 2014 from a year ago due to an improvement in manufacturing, with moderate economic growth expected with a projected expansion of 2–4 per cent in 2014.
Singapore’s economy grew by 5.1 per cent in the first quarter of 2014 from a year ago as an improvement in manufacturing offset a slowdown in services, the Ministry of Trade and Industry said on Monday.
As for inflation, the Monetary Authority of Singapore said in a separate news release that it’s expected to pick up in the coming months as firms continue to pass on accumulated cost increases to consumer prices, but it should ease in the second half of 2014.
It added that it will maintain its policy of a modest and gradual appreciation of the S$NEER policy band.
According to the latest advance estimates released by the Ministry of Trade and Industry, Singapore’s GDP rose by a modest 0.1 per cent in Q1 2014 on a quarter-on-quarter seasonally adjusted annualised basis, following the 6.1 per cent expansion in Q4.
The 5.1 per cent growth rate was, however, lower than the median expansion of 5.4 per cent forecast by economists and below the 5.5 per cent growth achieved in the previous quarter.
Economists said the advance estimate of 5.1 per cent is a conservative one and likely to be revised upwards.
Senior Economist of DBS Bank, Irvin Seah, said: “You got to take the set of figures with a pinch of salt, because the recent track record for the advance estimate number hasn’t been that good. For example, last year, in three out of four quarters, the advance estimate totally missed the mark, in the sense that, you know, the advance estimate shows that the economy is heading one directions, and then when the final figure came out, you know, it was the other direction.”
On a year-on-year basis, the manufacturing sector grew by 8.0 per cent, following the 7.0 per cent expansion in the previous quarter.
The faster pace of expansion was largely due to a sharp rebound in biomedical manufacturing output and stronger growth in chemicals output.
Services grew by 4.7 per cent on a year-on-year basis in the first quarter, lower than the 5.9 per cent growth in the previous quarter.
The moderation in growth was largely due to slower expansion in the wholesale & retail trade and finance & insurance sectors.
Economists said it is hard to quantify exactly by how much, but the manpower crunch faced by the services sector could be a reason why its growth has been constrained.
Curbs on foreign worker growth have added more to the challenges faced by several sectors.
Edward Lee, Regional Head of Research – Southeast Asia, Standard Chartered Bank, said: “Possibly, you can say foreign labour force adds about one to 1.5 percentage points to growth over the last 10 years or so. But it’s really hard to be precise. This is sort of average growth. But we do know on anecdotal evidence that businesses, especially the smaller and medium enterprise companies, do complain about their inability to find workers.”
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 0.1 per cent — moderating from the 6.1 per cent expansion in the preceding quarter — as services contracted.
According to the MAS, the Singapore economy is projected to expand 2–4 per cent in 2014, although the growth profile could be uneven.
“The Singapore economy is expected to grow at a moderate pace in 2014,supported by the cyclical uplift in the industrialised economies.
“Notwithstanding the weak growth outturn in Q1, the level of economic activity should stay on a broad upward trajectory for the rest of the year” said the MAS in a statement.
It went on to say that the outlook for the global economy has brightened, especially with the US recovery in the labour market expected to continue, lending support to consumer spending and the Eurozone forecast to emerge from two consecutive years of economic contraction.
Against this backdrop, the MAS said Singapore’s trade-related sectors should grow at a moderate pace.
Domestic-oriented activities are expected to stay resilient, supported by construction of transportation, housing and social infrastructure.
Overall growth, it cautioned will be capped by supply constraints, particularly in the labour market.
Source : Channel News Asia | April 14, 2014