Singapore’s economic growth slowed sharply in the first three months of this year, early data showed yesterday, but the city-state’s central bank maintained its position on monetary policy, saying the economy would be lifted by an acceleration in global growth.
Preliminary estimates showed Singapore’s trade-reliant economy expanded a seasonally adjusted 0.1 percent quarter-on-quarter, the trade ministry said. That compared with 6.1 percent expansion in the fourth quarter last year.
The ministry said growth was affected by a quarter-on-quarter contraction of 1.8 percent in the services industry.
The advance GDP estimates are based on two months of data, but preview quarterly economic performance.
On a year-on-year basis, GDP is estimated to have expanded 5.1 percent in the first quarter, slower than the 5.5 percent increase in the final three months of last year.
Singapore’s central bank, the Monetary Authority of Singapore, forecast growth of 2 to 4 percent for this year, against 4.1 percent last year.
Manufacturing rose 4.5 percent from the preceding quarter and 8 percent year-on-year due to a strong rebound in the output from the biomedical and chemical segments, the trade ministry said.
Construction remained strong, expanding 10.7 percent from the previous quarter as the government ramped up infrastructure projects. The sector was up 6.5 percent from the previous year.
Despite the first-quarter slowdown, the authority said it would maintain its policy of allowing for a “modest and gradual appreciation” of the local dollar as the global economy improves.
Singapore uses the exchange rate rather than interest rates to contain inflation, as the city-state imports almost all of its needs.
The authority said in a separate statement that there would be no change to the slope of an undisclosed band at which the Singaporean dollar is allowed to move and to the level at which the currency is centered.
“The policy stance is assessed to be appropriate for containing domestic and imported sources of inflation, and ensuring medium-term price stability as a basis for sustainable growth,” the authority said.
“The outlook for the global economy has brightened,” it added, pointing to improving prospects in the US, EU and Japan.
“Notwithstanding the weak growth out-turn in the first quarter, the level of economic activity should stay in a broad upward trajectory for the rest of the year,” it said.
The central bank forecast this year’s overall inflation rate at 1.5 to 2.5 percent.