Singapore dollar hovers near 2-month low as data shows GDP growth rate stabilises below 2%

The government has maintained its 2016 GDP forecast range at 1-3%.

The Singapore dollar continued near a 2-month low on Tuesday (25 May) even as the government confirmed that the city economy's first quarter growth rate was unchanged from the flash estimate of 1.8%.

USD/SGD traded a range of 1.3784-1.3829 so far on the day, slightly below Monday's high of 1.3842, which was its highest since 16 March.

The Ministry of Trade and Industry (MTI) said the year-on-year GDP expansion rate was 1.8% in the three months to March. The MTI also confirmed the sequential growth rate of 0.2% in Q1 and maintained the forecast range for 2016 at 1.0-3.0%.

The same numbers were flashed at the primary release on 14 April and the Monetary Authority of Singapore had taken measures to curb appreciation in the Singapore dollar as it would help reflate the economy thereby helping to shore up growth.

Though the Singapore government has forecast a wide range of 1-3% for full year GDP growth for 2016, the MAS has projected 1.9% as the likely rate of growth for the current year.

And any number below 2% will be a 7-year low.

The manufacturing sector, which accounts for almost one-fifth of the total economy, contracted by 1.0% year-on-year, following the 6.7% decline in the previous quarter.

Growth was dragged down primarily by the transport engineering and precision engineering clusters, detail showed.

Growth in the construction sector picked up to 6.2% year-on-year, from 4.9% in the previous quarter, supported by public sector construction works and private industrial building works.