Singapore’s trade-driven economy shrank in the first quarter as demand for exports remained weak, but a robust construction sector cushioned the decline, preliminary government estimates showed yesterday.
GDP for the three months to last month contracted 1.4 percent from the preceding quarter, weighed down by an 11.3 percent shrinkage in the manufacturing sector, the Singaporean Ministry of Trade and Industry said.
However, construction surged 15.1 percent, fuelled by a building frenzy in the housing market, and services climbed a modest 1.8 percent.
On a year-on-year basis, GDP declined 0.6 percent, the ministry said in a statement releasing preliminary estimates for the quarter based on two months of data.
The ministry said the contraction in manufacturing — which accounts for about a quarter of the economy — reflected weak output in the biomedical cluster dominated by pharmaceuticals.
Production in the electronics sector “picked up modestly” in the January-February period following three consecutive quarters of decline, the Monetary Authority of Singapore (MAS), said in a statement.
The MAS said the economy is expected to “see a gradual improvement for the rest of the year” as global demand recovers and Singapore remains on course for 1 percent to 3 percent full-year growth, in line with official estimates.
Inflation should remain under control, with upward pressure coming from a tight labor market, MAS said as it announced it was maintaining its policy of a “modest and gradual appreciation” of the Singapore dollar.
Singapore’s monetary policy is conducted via the local currency, which is traded against a basket of currencies of its major trading partners within an undisclosed exchange rate band.
The MAS said “there will be no change to the slope and width of the policy band, as well as the level at which it is centered.”