The Singapore economy grew by 1.8% year-on-year in the first quarter, unchanged from the previous quarter, according to the Ministry of Trade and Industry (MTI).
The ministry added that it is maintaining its GDP growth forecast for 2016 of 1.0% to 3.0%, citing the weakened global economy and sluggish growth of the city-state’s exports for the modest outlook.
On a quarter-on-quarter seasonally adjusted annualized basis, the economy expanded by 0.2%, slower than the 6.2% growth in the preceding quarter, MTI said in an official release.
On sectoral growth in the first quarter, manufacturing contracted by 1.0% year-on-year primarily on poor activity by the transport engineering and precision engineering clusters, following the 6.7% decline in the previous quarter.
Construction picked up to 6.2% year-on-year, from 4.9% in the previous quarter, supported by public sector construction works and private industrial building works.
The wholesale & retail trade sector grew by 1.8% year-on-year, down from the 6.8% expansion in the previous quarter, the slowdown largely attributed to the wholesale trade segment.
Growth in the transportation & storage sector contracted at a slower pace of 0.4% year-on-year compared to the 0.9 % contraction in the previous quarter. Growth was weighed down by the water transport segment, with container throughput declining by 9.0%.
Growth in the accommodation & food services sector came in at 1.5% year-on-year, higher than the 0.9% in the previous quarter. The improved performance was largely due to the 13.8 % increase in visitor arrivals.
The information & communications sector grew by 3.2% year-on-year, comparable to the 3.3% growth in the previous quarter. The expansion was mainly driven by growth in the IT & information services segment.
The finance & insurance sector expanded by 2.4% year-on-year, unchanged from the previous quarter. Performance was weighed down by the financial intermediation segment, even as the sentiment-sensitive and insurance segments experienced robust growth, said the ministry.
The business services sector’s growth moderated to 0.3% year-on-year from 0.8% in the previous quarter, while the “other services industries” grew by 1.4% year-on-year, slower than the 1.7% growth in the previous quarter.
MTI said the global economic outlook has weakened since early 2016, with global growth for the year now expected to be broadly similar to that in 2015. In particular, the growth outlook for the advanced economies has deteriorated marginally.
At the same time, it continued, the outlook “remains clouded with significant uncertainties and downside risks.” These include the risk that ongoing reforms in China could precipitate a significant drop in demand. There also continues to be the risk of a quickening of the normalization of monetary conditions in the U.S., while in the Eurozone, uncertainties in the run-up to the referendum in June on Britain’s exit from the European Union could adversely affect investor confidence in the region, thus leading to lower investments and consumption.
Domestically, the softening of global economic conditions and slowing down of world trade could weigh on export-oriented sectors such as manufacturing and transportation & storage. Persistent low oil prices will also continue to dampen the outlook for firms in the marine & offshore segment, and those in the precision engineering cluster that support the oil & gas industry.
“Taking into account the above factors, and barring the full materialization of downside risks, the 2016 growth forecast for the Singapore economy is maintained at 1.0% to 3.0 %,” MTI said.
Photo: Erwin Soo from Singapore
