SINGAPORE: The Singapore economy contracted by 0.6 per cent on a year-on-year basis in the first quarter of 2013, according to advance estimates from the Ministry of Trade and Industry.
On a quarter-on-quarter basis, the economy contracted by 1.4 per cent. This was due to a sharp decline in manufacturing.
The numbers undershot market expectations of 1 per cent growth.
In the first three months of the year, the construction sector grew 15 per cent quarter-on- quarter, while services expanded 1.8 per cent.
This helped to offset the 11.3 per cent decline in manufacturing.
On a year-on-year basis, construction grew 7%, services-producing industries grew 1.2 per cent while the manufacturing sector contracted by 6.5 per cent.
Economists say full-year economic growth is unlikely to hit the upper end of the 1 to 3 per cent official growth forecast.
Selena Ling, OCBC's head of treasury research & strategy, said: "Basically within manufacturing, what we see is that biochemicals, especially pharmaceuticals, remains very weak. And you also have a soft patch in electronics extending into the first quarter of this year. So it's a double whammy. Manufacturing continues to be the main drag on growth."
Despite the contraction in Q1 GDP, the Monetary Authority of Singapore (MAS) says the economy should grow at a modest pace this year, as external demand recovers.
It is sticking with a tight monetary policy - allowing for a modest and gradual appreciation of the Singapore dollar.
The central bank has also lowered its inflation forecast for the year, reflecting weaker price increases in recent months.
Core inflation, which excludes housing and private transportation costs, is expected to come in at 1.5 to 2.5 per cent - down from MAS' earlier estimates of 2 to 3 per cent.
The MAS has also lowered the CPI-All Items inflation rate to 3 to 4 per cent - down from the 3.5 to 4.5 per cent forecast previously.
- CNA/xq/ir
there is need to boost up it..