Singapore: Q1 economic growth revised down; MTI lowers growth forecast for 2019
May 21, 2019
Comprehensive national accounts data released on 21 May showed that the economy slowed by marginally more than previously estimated in the first quarter. Growth inched down to 1.2% year-on-year in Q1, from a preliminary estimate of 1.3% and below Q4’s revised 1.3% expansion (previously reported: +1.9% year-on-year). In quarter-on-quarter SAAR terms, the economy expanded a revised 3.8% (previously reported: +2.0% SAAR), accelerating from Q4’s revised 0.8% contraction (previously reported: +1.4% SAAR).
The external sector was the main driver behind the first quarter’s slightly softer expansion, as exports of goods and services contracted 2.1%, contrasting Q4’s 1.4% increase, and net export growth slowed from 5.6% in Q4 to a meagre 0.5% in Q1. This was likely mainly due to a moderation in global demand for technology products depressing semiconductor sales, along with frail Chinese import demand.
Moreover, government consumption growth ebbed to 2.9% in Q1 from the previous quarter’s 3.8%. On the contrary, private consumption gained impetus, registering a 4.2% expansion in Q1 (Q4: +2.2% year-on-year), likely supported by a tight labor market. Meanwhile, gross fixed capital formation decreased at a softer pace in the first quarter, posting a 0.4% contraction (Q4: -4.4% year-on-year).
Looking ahead, the economy will likely expand at the slowest pace in a decade this year due to a weaker global growth outlook which will drag noticeably on external demand. More positively, domestic demand should remain fairly strong, buoyed by a tight labor market and under-control inflation which will likely support household spending. Moreover, a turnaround in construction activity and a more expansionary fiscal stance should add further stimulus to the domestic economy.
Author: Steven Burke, Economist