SINGAPORE: The Singapore economy contracted by 0.6 per cent on a
year-on-year basis in the first quarter of 2013, according to
advance estimates from the Ministry of Trade and Industry.
On a quarter-on-quarter basis, the economy contracted by 1.4 per
cent. This was due to a sharp decline in manufacturing.
The numbers undershot market expectations of 1 per cent
growth.
In the first three months of the year, the construction sector
grew 15 per cent quarter-on- quarter, while services expanded 1.8
per cent.
This helped to offset the 11.3 per cent decline in
manufacturing.
On a year-on-year basis, construction grew 7%,
services-producing industries grew 1.2 per cent while the
manufacturing sector contracted by 6.5 per cent.
Economists say full-year economic growth is unlikely to hit the
upper end of the 1 to 3 per cent official growth forecast.
Selena Ling, OCBC's head of treasury research & strategy,
said: "Basically within manufacturing, what we see is that
biochemicals, especially pharmaceuticals, remains very weak. And
you also have a soft patch in electronics extending into the first
quarter of this year. So it's a double whammy. Manufacturing
continues to be the main drag on growth."
Despite the contraction in Q1 GDP, the Monetary Authority of
Singapore (MAS) says the economy should grow at a modest pace this
year, as external demand recovers.
It is sticking with a tight monetary policy - allowing for a
modest and gradual appreciation of the Singapore dollar.
The central bank has also lowered its inflation forecast for the
year, reflecting weaker price increases in recent months.
Core inflation, which excludes housing and private
transportation costs, is expected to come in at 1.5 to 2.5 per cent
- down from MAS' earlier estimates of 2 to 3 per cent.
The MAS has also lowered the CPI-All Items inflation rate to 3
to 4 per cent - down from the 3.5 to 4.5 per cent forecast
previously.
- CNA/xq/ir