Singapore economy grows 5.1% in Q1 as manufacturing accelerates

Singapore's economy grew by 5.1 per cent in the first quarter of 2014 from a year ago due to an improvement in manufacturing, with moderate economic growth expected with a projected expansion of 2–4 per cent in 2014, 

Singapore's economy grew by 5.1 per cent in the first quarter of 2014 from a year ago as an improvement in manufacturing offset a slowdown in services, the Ministry of Trade and Industry said on Monday.

As for inflation, the Monetary Authority of Singapore said in a separate news release that it's expected to pick up in the coming months as firms continue to pass on accumulated cost increases to consumer prices, but it should ease in the second half of 2014.

It added that it will maintain its policy of a modest and gradual appreciation of the S$NEER policy band.

According to the latest advance estimates released by the Ministry of Trade and Industry, Singapore’s GDP rose by a modest 0.1 per cent in Q1 2014 on a quarter-on-quarter seasonally adjusted annualised basis, following the 6.1 per cent expansion in Q4.

The 5.1 per cent growth rate was, however, lower than the median expansion of 5.4 per cent forecast by economists and below the 5.5 per cent growth achieved in the previous quarter.

On a year-on-year basis, the manufacturing sector grew by 8.0 per cent, following the 7.0 per cent expansion in the previous quarter.

The faster pace of expansion was largely due to a sharp rebound in biomedical manufacturing output and stronger growth in chemicals output.

Services grew by 4.7 per cent on a year-on-year basis in the first quarter, lower than the 5.9 per cent growth in the previous quarter.

The moderation in growth was largely due to slower expansion in the wholesale & retail trade and finance & insurance sectors.

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 0.1 per cent -- moderating from the 6.1 per cent expansion in the preceding quarter -- as services contracted.

According to the MAS, the Singapore economy is projected to expand 2–4 per cent in 2014, although the growth profile could be uneven.

"The Singapore economy is expected to grow at a moderate pace in 2014,supported by the cyclical uplift in the industrialised economies.

"Notwithstanding the weak growth outturn in Q1, the level of economic activity should stay on a broad upward trajectory for the rest of the year" said the MAS in a statement.

It went on to say that the outlook for the global economy has brightened, especially with the US recovery in the labour market expected to continue, lending support to consumer spending and the Eurozone forecast to emerge from two consecutive years of economic contraction.

Against this backdrop, the MAS said Singapore’s trade-related sectors should grow at a moderate pace.

Domestic-oriented activities are expected to stay resilient, supported by construction of transportation, housing and social infrastructure.

Overall growth, it cautioned  will be capped by supply constraints, particularly in the labour market.

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