Singapore: Economic growth revised up slightly for Q1
May 24, 2018
A comprehensive estimate by the Ministry of Trade and Industry released on 24 May showed that in the first quarter the economy grew a revised 1.7% in quarter-on-quarter seasonally-adjusted terms (SAAR) (previously reported: +1.4% qoq), down from 2.1% in Q4. On an annual basis, the economy expanded 4.4% (previously reported: +4.3% yoy), up from 3.6% in the prior quarter. The breakdown of the annual figure points to broader-based growth and a shift away from manufacturing and outward-oriented services towards domestic sectors.
The upward revision to the annual figure was largely a result of growth in the all-important services sector, which was greater than initially calculated (Q1: +4.1% yoy; previously reported: +3.8% yoy), with a particularly robust expansion in the finance and insurance sub-sector. Encouragingly, services growth became more broad-based, with momentum accelerating in domestic-oriented areas such as retail and food services. Growth in the manufacturing sector was revised down slightly to 9.8% (previously reported: +10.1% yoy) but remained buoyant on strong global economic activity. The contraction in construction was revised up to 5.0% (previously reported: -4.4% yoy). However, despite the sharp annual decline, the construction sector expanded on a quarter-on-quarter basis. This is in line with broader signs of a slow recovery in the housing market, with property prices rising in the first quarter and home sales picking up in April.
Economic growth should remain solid this year, although it will likely moderate from Q1’s blistering pace. The external sector will likely gradually lose impetus due to tough year-on-year comparatives and rising trade protectionism fears, although domestic demand should largely compensate, supported by a tight labor market, higher wages and a more expansionary fiscal stance.
Author: Jan Lammersen, Economist