Singapore’s Economy Contracts Annualized 1.9% in First Quarter

• Singapore’s Economy Contracts Annualized 1.9% in First Quarter

Singapore’s economy lost some of its momentum in the first quarter, contracting an annualized 1.9 percent from the previous three months.

Key Points

• Preliminary estimates from the Ministry of Trade and Industry on Thursday showed gross domestic product declined on an annualized basis compared with an expansion of 12.3 percent in the fourth quarter
• The median forecast of 14 economists in a Bloomberg survey was for a contraction of 1.8 percent
• Compared to a year ago, GDP rose 2.5 percent in the first quarter, lower than the 2.6 percent median estimate in a Bloomberg survey.

Big Picture

GDP figures are often volatile in Singapore, a small, open economy that’s heavily dependent on exports. The city state was hit by a slump in global trade in recent years but has started to recover following a pick-up in Chinese demand for electronics and other manufactured goods. Despite last quarter’s contraction, economists are projecting expansion of 2 percent this year, the same pace as last year.

The recovery is being fueled by stronger manufacturing output, but domestic-focused industries, such as retail and construction, remain weak. The labor market is also under pressure with the unemployment rate rising to a six-year high of 2.2 percent in the fourth quarter.

Other Details

• The services industry, which accounts for about two-thirds of the economy, contracted an annualized 2.2 percent in the first quarter from the previous three months
• Manufacturing declined an annualized 6.6 percent; construction expanded 5.4 percent
• Preliminary GDP figures are based on data from the first two months of the year and likely to be revised