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Singapore’s economy grew unexpectedly in the first quarter of the year as services and construction strengthened, the Trade Ministry said in a statement. Gross domestic product increased an annualised +1.8% in the last quarter from the prior quarter, when it grew +3.3%.
The pull-back in the quarter-on-quarter growth momentum was mainly due to the decline in externally-oriented sectors such as manufacturing and wholesale trade. Singapore’s economy heavily relies on manufacturing, trade and financial services. The Ministry said that during the quarter the manufacturing sector contracted by -6.8% when compared to a year ago.
But the construction sector expanded by +7.3% on a year-on-year basis, following the +5.8% growth in the preceding quarter. Growth in the finance & insurance sector accelerated to +10.5% on a year-on-year basis from +3.3% in the preceding quarter.
The Ministry now expects economic growth to improve gradually this year despite the Eurozone anticipated to remain in recession and Asian markets to show moderate growth in 2013. Growth in Singapore is forecast to range between 1% and 3%.
“Although Singapore’s economic growth eased in the first quarter, it is expected to improve gradually over the course of the year. Externally-oriented sectors are expected to pick up in tandem with the gradual recovery in external demand, while construction and key services sectors such as finance & insurance and business services will continue to provide support to growth,” the Ministry said.
“Nonetheless, risks to the global growth outlook remain. Fiscal uncertainties in the US remain with the failure of Congress to raise the debt ceiling, while the Eurozone is prone to a potential flare-up of the sovereign debt crisis. Other uncertainties include the risk of an escalation in regional geopolitical tensions, and a possible global outbreak of respiratory viruses.”