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Singapore gives credit to manufacturing as quarterly GDP growth up 4.9pc

SINGAPORE's economy posted first quarter year-on-year GDP growth of 4.9 per cent, falling short of the 5.5 per cent a Reuters poll predicted and the 5.1 per cent growth forecast from the government.

But quarter to quarter, the growth figures beat Reuters market poll predictions of one per cent growth as well as the Ministry of Trade and Industry's earlier estimate of a 0.1 per cent expansion.

"I don't think there would be any change in policy stance due to this, the economy is pretty much in a healthy shape," said DBS economist Irvin Seah.

Robust quarterly growth was attributed to solid performance in manufacturing, helped by recovery in global demand. The sector saw annualised quarter-to-quarter growth of 11.9 per cent, while year-on-year growth was up 9.8 per cent.

Despite signs of a pick up in global demand, some analysts worried about the financial sector.

Said Oversea-Chinese Banking Corp researcher Selena Ling: "We may see momentum slowing in the financial sector. If we get bearish news like Fed rate hike expectations, Singapore will be impacted."

The finance and insurance sector grew 3.5 per cent in the first quarter from the previous quarter. That compared with a 26 per cent growth in the fourth quarter.

Singapore's economy has been growing in recent quarters on manufacturing output with a pick-up in demand from developed economies such as the United States. Service sectors including finance have also propped up Singapore numbers.

The government expects the economy to grow two to four per cent in 2014, and economists generally feel full-year growth to come close to official forecast.

Predictions of 22 economists polled by the Monetary Authority of Singapore in March averaged out at 3.8 per cent GDP expansion in 2014.