Singapore's economic growth for next 3 quarters feared to average 3.6%

Slowdown will continually scare everyone.

Nomura reported that according to the government‟s flash estimates, GDP growth slowed to 5.1% y-o-y in Q1 2014 from 5.5% in Q4 2013 (Consensus: 5.4%, Nomura: 4.0%).

On an annualized seasonally adjusted basis, the economy rose only by 0.1% q-o-q after a strong 6.1% pick-up in Q4.

Here's more from Nomura:

GDP growth was supported by improvements in the manufacturing and construction sectors, which expanded by 8.0% y-o-y and 6.5% in Q1 from 7.0% and 4.8% in Q4, respectively.

The slowdown in the services sector was not as steep as expected, with growth in the services sector easing to 4.7% from 5.9%. The accompanying press release highlighted that this was “due to slower expansion in the wholesale & retail trade and finance & insurance sectors”

Taking into account Q1 growth, we revise up our 2014 GDP growth forecast to 4.0% from 3.5%. This is at the high end of the MAS forecast of 2-4%, which the authorities have maintained.

This is partly supported by the ongoing recovery in global growth. Nonetheless, this implies the slowdown continues, with growth in the remaining three quarters averaging 3.6% y-o-y.

The improvements in the manufacturing sector are likely to remain constrained by the restructuring agenda, which is likely to impact the services sector as well. Rising wage pressures that may be increasingly passed on to consumer prices and higher business costs could limit the upturn, even as the MAS seems to be less concerned about external risks.

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