SINGAPORE, April 12 (NNN-CNA) — The Singapore economy grew 1.3 per cent year-on year in the first quarter of 2019, according to advance estimates released by the Ministry of Trade and Industry (MTI) on Friday.<\/p>\n\n\n\n
The official estimate marked a slowdown from 1.9 per cent in the previous quarter, and came in below the expectations of 1.4 per cent in a Bloomberg poll. <\/p>\n\n\n\n
On a quarter-on-quarter seasonally adjusted annualised basis, gross domestic product (GDP) grew by 2 per cent, faster than the 1.4 per cent growth in the fourth quarter of last year. <\/p>\n\n\n\n
Weighing down on overall growth was a contraction in the key manufacturing sector, which shrunk 1.9 per cent on a year-on-year basis in the first quarter on the back of output declines in the precision engineering and electronics clusters. This is a reversal from the 5.1 per cent growth in the previous quarter. <\/p>\n\n\n\n
The first quarter contraction marked the sector\u2019s worst year-on-year growth performance since the first quarter of 2016, said OCBC Treasury Research. <\/p>\n\n\n\n
On a quarter-on-quarter seasonally-adjusted annualised basis, manufacturing contracted by 12 per cent, extending the 2.7 per cent decline in the preceding quarter. <\/p>\n\n\n\n
The services producing industries grew by 2.1 per cent on a year-on-year basis in the first quarter, slightly higher than the 1.8 per cent growth in the fourth quarter of last year. Growth was primarily supported by the information & communications and business services sectors. <\/p>\n\n\n\n
On a quarter-on-quarter seasonally-adjusted annualised basis, services grew by 4.8 per cent, faster than the 2.8 per cent growth in the previous quarter. <\/p>\n\n\n\n
While services have held up thus far, it is not resistant to external headwinds, said Mizuho’s head of economics and strategy Vishnu Varathan. <\/p>\n\n\n\n
\u201cThis is but a reflection of Singapore’s small and open economy deriving either directly or indirectly from trade and manufacturing-related services \u2013 a reminder that services accounting for two-thirds of the economy must not be conflated with trade insulation,\u201d he wrote in a note.<\/p>\n\n\n\n
\u201cWhat’s more, the property cooling measures dragging on related mortgage and real estate services activity has acted to dampen services activity overall.\u201d <\/p>\n\n\n\n
On the other hand, construction logged in its first quarter of positive growth following 10 consecutive quarters of decline. <\/p>\n\n\n\n
It grew by 1.4 per cent on a year-on-year basis in the first quarter – a turnaround from the 1.0 per cent decline in the previous quarter. <\/p>\n\n\n\n
\u201cThe recovery of the sector was supported by an improvement in private sector construction activities,\u201d said MTI. <\/p>\n\n\n\n
On a quarter-on-quarter seasonally-adjusted annualised basis, the sector grew of 7.8 per cent, extending the 5.1 per cent expansion in the preceding quarter. <\/p>\n\n\n\n
\u201cThe construction sector is finally out of recession,\u201d said DBS senior economist Irvin Seah. <\/p>\n\n\n\n
\u201cAlthough residential construction activities remain sluggish, impetus from a healthy pipeline of infrastructure projects is gradually taking effect. Expect better showing from this sector in the coming quarters.\u201d<\/p>\n\n\n\n
With the first-quarter advance estimates showing a less rosy outlook, some economists have downgraded their full year growth forecasts for Singapore. <\/p>\n\n\n\n
OCBC, for instance, is revising its 2019 GDP growth forecast to 1.8 per cent to 2 per cent, with headline and core inflation tipped at 0.5 per cent and 1.5 per cent year-on-year, respectively. <\/p>\n\n\n\n
“This factors in the weaker-than-expected first quarter growth momentum and assumes a potentially soft second quarter as well,” said the bank\u2019s head of treasury research and strategy Selena Ling. <\/p>\n\n\n\n
“Until we see a clear bottom and subsequent improvement in the China and global growth prospects, the overall picture for the Singapore economy remains cautious.”<\/p>\n\n\n\n
DBS is also cutting its full year GDP growth estimate to 2.6 per cent though Mr Seah reckons that the first quarter will likely be the weakest quarter for 2019. <\/p>\n\n\n\n
\u201cWe believe the economy has reached the bottom of the current growth cycle,\u201d he wrote. \u201cWe expect a steady pick-up in growth performance in the coming quarters, as economic outlook improves.\u201d <\/p>\n\n\n\n
This is due to a slew of policy stimulus from China and a stable monetary policy by global central banks, which will provide the uplift in global economic conditions. <\/p>\n\n\n\n
\u201cThis should bring about a significantly stronger second half compared to the first quarter for Singapore. In short, this year will likely be back-loaded,\u201d he said. <\/p>\n\n\n\n