Singapore's Gross Domestic Product (GDP) has expanded by 2.5 per cent for the first quarter of 2017 as compared to the same period in 2016. According to advance estimates released by the Ministry of Trade and Industry (MTI) on Thursday, growth in the manufacturing and services industries made the expansion possible.
However, the numbers indicate a setback as previous quarter's growth was 2.9 per cent following which the economy shrank 1.9 per cent during the January to March period.
While talking about the boom in factory output towards the end of 2016, Maybank Kim Eng economist Chua Hak Bin, according to Channel News Asia, said: "The quarter-on-quarter figure tends to be very volatile. A mild pullback shouldn't be a surprise given the manufacturing surge last quarter."
Local currency will be guided to a zero appreciation stance against those of its major trading partners, said Monetary Authority of Singapore (MAS). "A neutral policy stance is appropriate for an extended period and should ensure medium-term price stability," MAS noted in its semi-annual monetary policy statement on Thursday, according to Today Online.
Meanwhile, the central bank added that the "underlying momentum in the (Singapore) economy remains intact" despite the first-quarter setback, reported the website.
While Singapore's manufacturing sector contracted 6.6 per cent on a quarter-on-quarter seasonally adjusted annualised basis for the first three months of 2017, other sectors' outputs also shrank by 1.1 per cent year on year in the first quarter.
Dr Chua said that the manufacturing sector showed a "very healthy reading" as it moderated from growth of 11.5 per cent to 6.6 per cent on a year-on-year basis. Moreover, the other sector expanded by 5.4 per cent, accelerating from the 0.8 per cent growth in the preceding quarter on a quarter-on-quarter seasonally adjusted annualised basis.
In the case of services-producing industry, it grew 1.5 per cent on a year-on-year basis in the first quarter, however, shrank at an annualised rate of 2.2 per cent on a quarter-on-quarter basis.
Such mixed figures, according to Mizuho Bank's senior economist Vishnu Varathan, show that the local services sector - accounting for about two-thirds of the economy - will continue to underperform. "Anything related to the property or banking sector is not in high gear and with these uncertain (components), any recovery is not going to come as quickly as what we've seen in the manufacturing sector...Services will remain a lingering drag," " he told Channel NewsAsia.