Singapore

Showing stronger growth

In line with expectations, 1Q2018 GDP preliminary estimate rose 4.3% y/y in 1Q2018 and on a q/q seasonally adjusted basis, it grew by 1.4%.

Growth was supported by manufacturing and services with slower contraction from the construction activities.

We project 2018 GDP at 3.8% underpinned by broad-based growth from manufacturing and services with lower declines from construction and a risk from the US-China trade uncertainties although it is lower than the risk of the US inflation overshooting.

• In line with expectations, 1Q2018 GDP preliminary estimate rose 4.3% y/y from 3.6% y/y in 4Q2017. On a q/q seasonally adjusted basis, GDP grew by 1.4% from 2.1% in 4Q2017.

• The manufacturing sector expanded strongly by 10.1% y/y in 1Q2018 from 4.8% y/y 4Q2017. However, we expect the growth in this sector to eventually moderate. Global demand for electronics is showing some signs of softening.

• Besides, the services sector which accounts for two-thirds of the economy grew 3.8% y/y in 1Q2018 from 3.5% y/y in 4Q2017, supported by wholesale & retail trade, and finance & insurance. We expect this segment of the economic activities to remain healthy.

• However, the construction sector continued to decline but at a slower pace by -4.4% y/y in 1Q2018 from -5.0% y/y in 4Q2017. The sector has been in the negative growth trajectory for the sixth consecutive quarter. The weak performance was due to a fall in both private sector and public sector construction activities. Despite the fall, we can expect some brighter signs potentially with a broad-based pick-up in the residential property segment, a key drag for the construction in the past.

• With the strong 1Q2018 GDP number, we expect the full-year GDP to be around 3.8% from broad-based growth from manufacturing and services with construction expected to register smaller declines. The US-China trade uncertainties pose little risk; lower than the US inflation risk overshooting from stronger core CPI and wage growth.

Source: AmInvest Research - 16 Apr 2018