SINGAPORE: Singapore’s first-quarter economic growth exceeded earlier estimates by more than one percentage point, but contrary to expectations, the Ministry of Trade and Industry (MTI) will not be upgrading its full-year outlook in view of “heightened uncertainties” associated with the Covid-19 pandemic.
Gross domestic product (GDP) grew 1.3 per cent year on year in Q1, outperforming advance estimates of a 0.2 per cent growth, according to MTI data released on Tuesday morning, report agencies.The final print surprised private-sector economists who were already anticipating a 0.9 per cent growth in Q1, according to a Reuters poll.
Reversing Q4’s 2.4 per cent contraction, Q1’s performance is the first turnaround for the economy since the pandemic hit in Q1 last year.
On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 3.1 per cent, extending the 3.8 per cent expansion in Q4. Describing Singapore’s Q1 performance as “stronger than expected”, MTI permanent secretary Gabriel Lim told reporters during a virtual briefing that the key sectors that supported GDP growth were manufacturing, finance and insurance and wholesale trade.
Making the most gains was the manufacturing sector, with a 10.7 per cent year-on-year expansion, even faster than Q4’s 10.3 per cent growth.
At the same time, sectors that were consumer-facing or related to tourism and aviation, as well as construction, continued to shrink.
The construction sector continued to be weighed down by declines in both public and private-sector construction works but saw an improvement with a 22.7 per cent year-on-year contraction, up from a 27.4 per cent contraction in Q4.Despite the good showing, Mr Lim said MTI has decided to maintain its 2021 full-year growth forecast at 4 to 6 per cent for now, owing to “the larger-than-usual degree of uncertainty over the course of the pandemic globally as well as our domestic situation”.
“While it is possible that the Singapore economy will outperform the ‘4 to 6 per cent’ growth forecast for 2021 if external demand picks up more strongly than expected, there are also significant downside risks. The most important is the trajectory of the Covid-19 pandemic,” said Mr Lim.
Singapore is now battling a new wave of Covid-19 infections driven largely by the B1617 variant from India. Alarmed by the sudden increase in cases and active clusters, the authorities have banned dining-in and tightened restrictions on social gatherings, among other measures until June 13.
This latest resurgence comes weeks after economists, encouraged by improving economic indicators in Q1, said they were expecting MTI to upgrade its full-year growth outlook.
The Economic Survey of Singapore in February also pointed to improving external economic environment, largely due to upgrades in the growth outlook for advanced economies like the United States.