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A Look at Economic Events in and Around Singapore

Every week we take a look at the latest news that is going on in or around Singapore. In today’s article, we’ll be taking a look at Singapore’s solid economic growth across various industries.

Singapore’s economy grew 4.9% in the first quarter this year

According to recent data released by Singapore’s Ministry of Trade and Industry (MTI), our country’s gross domestic product (GDP) grew by 4.9% on a year-on-year basis in the first quarter this year. While it was a tad lower as compared to the government’s initial estimate of 5.1%, the slight discrepancy was partly due to the change in the base year used from from 2005 to 2010.

Economists that were polled by Reuters had predicted a year-on-year growth rate of first quarter GDP of 5.5%. So, the official figures were just a small fraction away from expectations.

On a sequential basis (i.e. a quarter-on-quarter comparison), Singapore’s economy had grown by only 2.3% after seasonal adjustments were made. This is a slowdown from the previous quarter’s 6.9% growth rate.

Sector

1st Quarter 2014
(% year-on-year gain)

4th Quarter 2013
(% year-on-year gain)

Difference

Manufacturing

9.8

7

2.8

Construction

6.7

7.3

-0.6

Finance & Insurance

5.4

10.5

-5.1

Accommodation & food services

0.9

3.4

-2.5

Source: Ministry of Trade & Industry

A further breakup of the year-on-year figures reveals a different story for the various sectors in the economy. The manufacturing sector GDP has performed well with a 9.8% expansion, higher than the 7% growth it experienced the last quarter. The 2.8 basis points increase can be attributed to a “sharp rebound in the biomedical manufacturing cluster, as well as stronger growth in the chemicals and transport engineering clusters,” according to the MTI.

On the other hand, growth has slowed elsewhere, though it must be noted that there is still growth. The construction sector slowed its pace of expansion from 7.3% in the previous quarter to 6.7% in the first quarter of 2014. With a glut of private properties unsold, it is unlikely that developers will continue to bid for projects and thus, the construction sector may take an even greater hit in time to come.

Moving on to the Insurance and Finance sector, its growth rate had also decelerated sequentially from 10.5% to 5.4%. The relatively ‘poor’ showing is primarily due to a ”slowdown in the sentiment-sensitive cluster”.

Elsewhere, the Accommodation and Food Services segment also saw slower growth of only 0.9%, down from 3.4%  in the previous quarter.

Foolish Takeaway

With the strong growth experienced in the manufacturing sector, companies in that space, which includes UMS Holdings Limited (SGX: 558), Venture Corporation (SGX: V03) and STATS ChipPAC (SGX: S24), might have some strong tailwinds going for them. Notably, STATS ChipPAC, a leading service provider of semiconductor packaging design and distribution solutions, has surged strongly over the past few days due to a possible buy-out offer.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.