The final first quarter GDP of Singapore was upwardly revised to 0.2% on a sequential basis saar from the advance estimate of 0%. However, the year-on-year expansion was unchanged at 1.8%. An upward revision to the manufacturing GDP in the first quarter led to the better growth outcome. This countered the downward revision of the growth in services sector. Apart from manufacturing, construction also underpinned the GDP growth, expanding 10.5% on a sequential basis because of public sector projects.
In the mean time, the industrial output grew 2.9% y/y, the most solid growth in 20 months. However, given the factors such as a self-sufficient manufacturing sector in China and the high global semiconductor inventory, the strength of the growth in industrial production continues to be questionable, said Barclays in a research report.
“We maintain our 2016 full-year growth forecast of 1.5%, on the view that the headwinds of weak external cyclical demand and low oil prices are likely to keep Singapore’s externally-oriented sectors subdued in 2016”, noted Barclays.
The Singaporean government is taking several approaches to stabilize short-term growth, sustain employment levels, speed up economic restructuring and improve competitiveness. However, in the coming months, monetary policy is expected to take a back seat. Barring a sharp rise in resident unemployment and huge external shock, the MAS is expected to keep policy on hold until October, given the projection that the core inflation is expected to slowly rebound in the remainder of 2016 as the base effects from lower oil prices diminish, added Barclays.
