May 22, 2018 / 4:36 AM / a month ago

Singapore final first quarter GDP growth seen in line with initial estimates

SINGAPORE (Reuters) - Singapore’s economy is expected to have expanded modestly in the first quarter, a Reuters poll found on Tuesday, in line with initial estimates, although slowing growth in factory activity and dwindling electronic exports could cloud the outlook.

FILE PHOTO: A woman walks through a shopping mall in Singapore January 24, 2018. REUTERS/Soe Zeya Tun/File Photo

The poll predicted quarter-on-quarter growth at 1.4 percent in the January-March period on a seasonally adjusted and annualized basis, unchanged from the preliminary figure announced in April.

If confirmed, that would mark two straight quarters of slowing growth - a moderation not seen in nearly six years.

From the year earlier, Singapore’s first quarter final gross domestic product was forecast to expand 4.3 percent, according to the poll’s median of 11 economists, also in line with the initial estimate.

Growth, analysts say, is supported largely by the city-state’s manufacturing sector, especially electronics.

But as growth in Singapore’s factory output starts to moderate and exports of electronics decline, analysts have started to question the outlook for output in the city-state.

“The first quarter growth rate could be the highest number we see this year,” said UOB bank economist, Francis Tan.

“The manufacturing sector is expected to slow...as well as lower sales of semiconductor in the Asia Pacific region,” Tan added.

Manufacturing and exports of electronics were one of Singapore’s main drivers of growth last year, leading to a 3.6 percent rise in GDP in 2017 — the fastest pace in three years.

But analysts and policymakers are concerned that the city-state’s growth is too heavily dependent on its narrow electronics sector, which has seen a contraction in exports for five straight months.

A pick up in another volatile sector, pharmaceuticals, helped offset the blow in April leading to unexpectedly sharp rise in exports year-on-year.

A trade spate between the United States and China is another headwind for Singapore - often seen as a bellwether for the global economy because its exports equate to around 200 percent of its GDP.

Singapore’s central bank tightened monetary policy for the first time in six years in April, citing uncertainties posed by the spat, although there has since been some progress in talks between the two global powers.

Reporting by Fathin Ungku; Editing by John Geddie and Sam Holmes

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