Singapore: Economic growth slumps to near decade low in Q1
April 12, 2019
The economy flagged in the first quarter of the year due to a decline in the manufacturing sector, according to an advanced estimate released by the Ministry of Trade and Industry (MTI) on 12 April. The economy expanded 1.3% on an annual basis in Q1, marking the worst reading in nearly a decade. This was significantly lower than the 1.9% figure recorded in Q4 last year and undershot analysts’ expectations of a 1.5% outturn. In quarter-on-quarter seasonally-adjusted annualized terms (SAAR), GDP growth accelerated to 2.0% in Q1, up from the 1.4% posted in Q4 2018.
The manufacturing sector contracted 1.9% in Q1 in annual terms, contrasting the 5.1% expansion in the previous quarter, due to weaker output in the precision engineering and electronics clusters. On the other hand, the construction sector expanded for the first time in two-and-a-half years on stronger private-sector activity, increasing 1.4% in Q1 (Q4 2018: -1.0% year-on-year). Meanwhile, the service sector grew 2.1%, which was slightly higher than the 1.8% expansion registered in the quarter prior.
Year-on-year growth is seen picking up in the remainder of the year on a more favorable base of comparison and expansionary fiscal policy. However, Singapore’s economy continues to face multiple economic headwinds, chiefly a slowdown in global demand for technology, uncertain momentum in China and the U.S.-Sino trade standoff.
Author: Steven Burke, Economist