ECONOMY | Staff Reporter, Singapore

Singapore’s amazing economy blew the gates off with 22.5% growth in Q1 2011

And the manufacturing sector is top contributor as it surged 75.4% q-o-q saar in Q1 2011.

Following a modest 3.9% q-o-q saar rise in Q4 2010, Singapore’s GDP growth accelerated in Q1 2011, recording a 22.5% sequential expansion. While services had recovered more quickly in Q4 last year, the manufacturing sector caught up in Q1 2011, boosted by an improvement in end demand.

Excluding the spike in pharmaceutical production, economic activity increased by 13%, supported by expansions across a broad range of industries. Within the services cluster, strong domestic and regional demand helped the financial, hotels & restaurants and other services sectors expand rapidly.

i) Manufacturing Sector
Manufacturing activity surged by 75.4% q-o-q saar in Q1 2011, after recording a 0.7% rise in the preceding quarter. Abstracting the spike in biomedical output, the rest of the sector grew by 27% q-o-q saar. Growth was underpinned by expansions in the electronics and precision engineering clusters.

Electronics output grew by 31% q-o-q saar in Q1 2011, as the infocomms & consumer electronics segment saw an uptick, which in turn reflected the improvement of final demand in the G3 markets. This also had positive spillovers into the semiconductors segment.

Meanwhile, the precision engineering cluster received a boost from the step-up in machinery and equipment investments in Singapore. Other industries such as chemicals, transport engineering and general manufacturing, recorded positive gains as well.

ii) Construction Sector
After two quarters of decline, activity in the construction sector rebounded in Q1 by 13.3% q-o-q saar, led by a pickup in public construction activities. Public residential construction grew 6.2% q-o-q saar, following strong take-up rates for HDB Build-to-Order projects.

The public on-residential segment was supported by civil-engineering and institutional projects like the MRT Downtown Line and NUH Medical Centre. Meanwhile, construction of private residential buildings continued to record steady growth.

iii) Services Sector
The services sector strengthened further in Q1 2011, registering growth of 8.8% q-o-q saar, following a 5.6% increase in the preceding quarter. Alongside the rapid growth in the domestic manufacturing industry, activity in some of the supporting trade-related services also intensified. Within the transport & storage segment, for instance, container throughput volumes expanded 9.2% q-o-q saar, underpinned by rising global trade flows.

Meanwhile, buoyed by strong tourist arrivals, the tourism-related services sector surged in Q1 2011. In particular, the hotels segment continue to record robust growth, with hotel occupancy rates trending upwards to 85.9% sa, from 84.3% in Q4.

Despite heightened uncertainty in global markets due to the Middle East/North Africa political crisis and earthquake in Japan, growth of the overall domestic financial sector accelerated in Q1, to 27.1% q-o-q saar, extending the 16.9% surge witnessed in Q4 2010. The expansion was underpinned by strength in lending activities. In particular, lending to businesses picked up pace alongside a step-up in economic activity, marking its sixth consecutive quarter of gains.

The offshore lending segment was bolstered by firm non-bank loan growth to the region, as well as an increase in demand for funds from the advanced economies. In contrast, activity in the sentiment-sensitive cluster was capped by a reversal of sentiments in global markets.

The region saw an outflow of funds for the ninth consecutive week, with a concomitant dampening effect on activity in the local bourse. Daily average turnover volumes in the local stock market declined by 6.5% q-o-q in Q1.  

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