SINGAPORE: Singapore’s economic growth slowed sharply in the first three months of the year, data showed Monday, but the central bank stood pat on monetary policy saying it would be lifted by a pick-up in global growth.
Preliminary estimates showed the city-state’s trade-reliant economy expanded a seasonally adjusted 0.1 percent quarter on quarter, the trade ministry said. That compared with 6.1 percent expansion in October-December.
The ministry said growth was hit by a 1.8 percent quarter-on-quarter contraction in the services industry.
The advance GDP estimates are based on two months of data, but is given out as a preview to the trade-sensitive economy’s performance during the quarter.
On a year-on-year basis, GDP is estimated to have expanded 5.1 percent in the first quarter, slower than the 5.5 percent rise in the final three months of 2013.
The city’s central bank, the Monetary Authority of Singapore (MAS), forecast growth of 2.0-4.0 percent for 2014, against from 4.1 percent last year.
Manufacturing rose 4.5 percent from the preceding quarter and 8.0 percent year-on-year due to a strong rebound in the output from the biomedical and chemical segments, the trade ministry said.
Construction remained strong, expanding 10.7 percent from the previous quarter as the government ramped up infrastructure projects. The sector was up 6.5 percent from the previous year.
Despite the first quarter slowdown, the MAS said it would maintain its policy of allowing for a “modest and gradual appreciation” of the local dollar as the global economy improves.
Singapore uses the exchange rate rather than interest rates to contain inflation as the city-state imports almost all of its needs.
The MAS said in a separate statement there would be no change to the slope of an undisclosed band at which the dollar is allowed to move and to the level at which the currency is centred.
“The policy stance is assessed to be appropriate for containing domestic and imported sources of inflation, and ensuring medium-term price stability as a basis for sustainable growth,” the MAS said.
“The outlook for the global economy has brightened,” it added, pointing to improving prospects in the United States, European Union and Japan.
“Notwithstanding the weak growth outturn in the first quarter, the level of economic activity should stay in a broad upward trajectory for the rest of the year.”
The central bank forecast this year’s overall inflation rate at 1.5-2.5 percent.