SINGAPORE: The Singapore economy grew at 8.5 per
cent on-year in the first quarter, better than consensus
expectations of 5.7 per cent according to a MediaCorp poll of 10
economists.
This compares to the growth in the previous quarter
at 12 per cent.
This was according to the advanced estimates by the
Ministry of Trade and Industry (MTI).
On a seasonally-adjusted quarter-on-quarter annualised basis, the
economy grew by 23.5 per cent.
This is an improvement from the 3.9 per cent growth in the previous
quarter.
The MTI said the strong growth was driven by the manufacturing
sector, particularly in the electronics and precision engineering
clusters, which benefited from a pick up in business investment in
the region.
On a year-on-year basis, the manufacturing sector grew 13.9 per
cent, compared to the expansion of 25.5 per cent in the previous
quarter.
The construction sector grew by 2.6 per cent on a year-on-year
basis in the first quarter, reversing the contraction of two per
cent in the previous quarter.
This mainly reflected an increase in building activities in the
residential segment.
The services-producing industries also saw an increase in
activities in the first quarter of 2011.
Compared to a year ago, the services producing industries expanded
by 7.2 per cent, following the growth of 8.8 per cent in the
preceding quarter.
Growth was driven by the financial services sector, which saw an
increase in commercial bank lending activities.
Trade-related services such as the wholesale and retail trade, and
transport and storage sectors also expanded, in line with continued
growth in global demand.
The Monetary Authority of Singapore separately said that economic
activity is likely to be sustained at a high level for the rest of
the year - even as domestic cost and price pressures remain
firm.
And to contain those pressures, the MAS has further tightened its
policy by re-centring the exchange rate policy band upwards.
Strength of the economy and the policy stance, both caught some
analysts by surprise. Still some economists say they will not be
revising their forecasts as risks remain.
Vishnu Varathan, an asia economist with Capital Economics, said:
"There are three overarching risk factors, and one is Japan, the
calamity in Japan means that we are less certain about export
demand, and second high oil prices. This can have a huge knock on
effect in terms of demand and as well as what it means for the
squeeze on manufacturers.
"And the last factor would be the European debt crisis, that's
still ongoing even though some of the tensions have receded. That's
still a major unknown out there."
-CNA/wk/ac