Singapore GDP Q1 2016


Economy stalls in Q1

According to advanced estimates released by the Ministry of Trade and Industry on 14 April, in Q1 GDP did not grow over the previous quarter at a seasonally adjusted annualized rate (SAAR), which represented the weakest performance in three quarters. The reading was significantly below the robust 6.2% rise recorded in Q4 and slightly undershot the 0.2% growth the markets had expected.

The flat reading in Q1 was due to a contraction in the services sector offsetting growth in a number of sectors. Services weighed heavily on the overall result, swinging from 7.7% growth in Q4 to 3.8% fall in Q1. Construction improved from a 6.0% increase in Q4 to a 10.2% rise in Q1. Manufacturing grew a remarkable 18.2%, which represented a strong rebound from Q4’s 4.9% decline, yet was strongly influenced by a temporary increase in pharmaceutical production in January.

In year-on-year terms, GDP expanded 1.8% in Q1, which was in line with the 1.8% growth recorded in Q4. Overall, Singapore’s economy grew by 2.0% in 2015, which was lower than 2014’s 3.3% rise and marked the softest reading since 2009.

The budget for 2016 was delivered to Parliament on 24 March. It represents a mixture of fiscal responsibility and moderate support to growth. The government expects to register a fiscal surplus of 0.8% of GDP in 2016 and it nevertheless introduces a set of measures to support firms and individuals—such as raising the corporate income tax rebate and introducing a grant for all Singaporean children. These measures, together with the 7.3% expansion in total government expenditure, are designed to counter the cyclical headwinds as well as to stimulate long-term productivity.

The Monetary Authority of Singapore expects GDP to grow at a rate of between 1.0% and 3.0% in 2016. FocusEconomics Consensus Forecast panelists project that the economy will expand 1.9% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, the panel expects growth to accelerate to 2.3%.

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Singapore GDP Chart

Singapore GDP Q1 2016 0

Note: Quarter-on-quarter changes of seasonally adjusted annualized GDP and year-on-year variation in %.
Source: Ministry of Trade and Industry (MTI) and FocusEconomics Consensus Forecast.

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