Singapore’s economy grew more than initially estimated last quarter as demand for the island’s exports improved amid a recovery in the U.S.
Gross domestic product rose an annualized 3.2 percent in the three months through March from the previous quarter, the Ministry of Trade and Industry said in a statement on Tuesday, compared with an April estimate of 1.1 percent. The median forecast in a Bloomberg News survey was 2 percent.
The island’s central bank held back from further monetary policy easing last month and the trade ministry today said global growth is expected to “improve marginally” this year. The U.S. jobless rate in April fell to the lowest since May 2008, indicating the economy is settling into a moderate pace of expansion, while China’s leaders have stepped up stimulus measures.
“There isn’t a great impetus for easing,” said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “Things look slightly more upbeat. Oil prices are stabilizing higher and so I think the MAS will retain policy where it is, without further easing, unless we see a fresh and unexpected negative shock.”
The Singapore dollar fell 0.4 percent to S$1.3477 against its U.S. counterpart as of 2:24 p.m. local time. The currency has dropped about 1.7 percent this year.
Singapore’s economy expanded 2.6 percent in the first quarter from a year earlier, after growing 2.1 percent in the previous three months, the trade ministry said. The median estimate in a Bloomberg survey was for a 2.2 percent gain.
The government reiterated its forecast of 2 percent to 4 percent growth this year. The economy expanded 4.9 percent in the fourth quarter from the previous three months.
Tempering Singapore’s growth outlook is industrial production. Data released today showed factory output in April fell the most since February 2013.
While the decline doesn’t bode well for second-quarter GDP, it is also due to the “unpredictable nature” of pharmaceuticals output, said Leong Sook Mei, Singapore-based Southeast Asia head of global markets research at Bank of Tokyo-Mitsubishi UFJ.
The Monetary Authority of Singapore, which uses the island’s dollar to manage price pressure, said April 14 it would maintain a modest and gradual appreciation of the local dollar without adjusting the pace of the currency’s moves. The central bank unexpectedly eased monetary policy in January.
The monetary policy stance remains appropriate and unchanged, with no material change to the inflation outlook, Deputy Managing Director Jacqueline Loh said at a briefing today. Consumer prices fell in April for a sixth straight month.
Singapore’s manufacturing rose 0.2 percent in the first quarter from the previous three months, compared with an initial estimate of a 2.3 percent drop. Construction jumped 12.9 percent, and services gained 2.1 percent.
Slower manufacturing gains were primarily due to a decline in the output of transport engineering, electronics and biomedical manufacturing, the ministry said. Accommodation and food services were hurt by fewer visitor arrivals, it said.
Growth in construction was boosted by private commercial building projects, according to Yong Yik Wei, director of the trade ministry’s economics division. Public sector projects may support the industry for the rest of the year, she said.
“Given the expected improvement in global economic conditions in 2015, externally-oriented sectors such as wholesale trade and finance and insurance are likely to see improved growth prospects,” the ministry said.