Singapore's Q1 GDP growth better than expected at 2.6%

THE Singapore economy grew a better-than-expected 2.6 per cent year-on-year in the first quarter of 2015, despite a contraction in the manufacturing sector, the Ministry of Trade and Industry (MTI) said on Tuesday morning.

This beat both the initial flash estimate of 2.1 per cent growth, and the market's expectation that this could be raised slightly to 2.2 per cent.

Due to the decline in the output of the transport engineering, electronics, and biomedical manufacturing clusters, the manufacturing sector contracted by 2.7 per cent year-on-year, extending the 1.3 per cent decline in Q4 2014.

Growth in the services sector accelerated to 3.8 per cent year-on-year in Q1, up from 3.1 per cent in the previous quarter.

After seasonal adjustments and on an annualised basis, the Singapore economy grew 3.2 per cent quarter-on-quarter - far higher than the flash estimate of a 1.1 per cent expansion.

The Singapore government maintained its 2015 full-year growth forecast of 2-4 per cent.

Looking ahead, MTI said that sector-specific factors could weigh on growth. "For instance, low oil prices have dampened the outlook of the marine & offshore industry, while tourism-related sectors such as the accommodation & food services sector may face headwinds in the near term due to lacklustre visitor arrivals," said MTI.

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