• Singaporean economy expands 4.4 pct in Q1 2018, mas likely to adopt wait-and see approach

    Source: FxWire Pro - Commentary / 24 May 2018 12:49:47   America/New_York

    Singaporean first quarter economic growth was upwardly revised to 4.4 percent on a year-on-year basis, more rapid that the flash estimates of 4.3 percent. On a sequential basis, the economy grew 1.7 percent. While the first quarter data was upwardly revised a bit, the quarter-on-quarter data implied a second quarter of deceleration in momentum, and this might sustain into the second quarter where the sequential growth figure might flat-lone or even fall slightly, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

    The economic growth was mainly driven by manufacturing, which grew 9.8 percent, helped by electronics, precision engineering and chemicals clusters that rose by double-digit growth and services. Services growth was upwardly revised; however, manufacturing and construction growths were revised down.

    The widening of the growth engines from manufacturing and outward-oriented services augurs well for the economic growth to sustain for the remainder of 2018. But, the construction sector might not see light at end of the tunnel until the end of this year, and might still register a full-year contraction of 2.2 percent year-on-year due to ongoing softness in private and public sector activities, stated Selena Ling.

    According to MTI, Singapore’s economy is expected to grow 2.5 percent to 3.5 percent for the full year, up from its earlier projection of 1.5 percent to 3.5 percent, citing that the growth rate is likely to stay firm and underpinned by outward-oriented sectors with a broadening to domestically-oriented services like retail and food services over the course of the year.

    The timing for the narrowing of the official growth projection is a bit earlier than expected, but the range itself is not a surprise given earlier hints that it would be slightly higher than the midpoint of the forecast range. Singapore’s headline inflation continues to be very weak at 0.2 percent in the first quarter of 2018.

    “MAS is likely to adopt a wait-and-see attitude towards the October MPS given that growth-inflation dynamics are not out of sync with their forecasted trajectories”, added Selena Ling.

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