Singapore economy eases to a 2.7% growth in Q1

It came from a strong 2.9% expansion in March.

The city-state saw its economy expand yet again in the first quarter of the year.

According to the latest figures from the Ministry of Trade and Industry (MTI), Singapore economy grew by 2.7% year-on-year. However, this was a slight ease from the 2.9% growth recorded in the previous quarter.

According to UOB, robust performance in the tradables sector such as the manufacturing and transport/storage sectors continued to contribute strongly to the overall GDP growth. Meanwhile, the construction, household demand, business investment, and accommodation & food services sectors remained weak.

Consumption expenditure contracted for the 2nd consecutive quarter, the first time in a non-recessionary period since UOB's data started in 1976.

"This could signal a deeper, structural issue within the labour market that weakened consumer sentiments and resulted in the contraction of household consumption," UOB said.

The Trade Ministry maintained their “1% to 3%” 2017 GDP growth forecast, while adding that GDP growth may come in higher than the 2% in 2016, barring the materialization of several mentioned downside risks. We maintained our GDP growth forecast of 2.4%.

" We believed that the 2.7% y/y growth in 1Q 2017 could be the peak on-year growth rate for 2017 and that growth rates in the next 3 quarters will be lower, although still higher than 2% y/y. With no strong upside to economic growth, and inflationary pressures capped by the weaker labour market conditions, we believe that the MAS will keep the SGD NEER on the current neutral appreciation stance in the upcoming October policy meeting," UOB said.

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