SINGAPORE: The Singapore economy grew at 8.5 per cent on-year in the first quarter, better than consensus expectations of 5.7 per cent according to a MediaCorp poll of 10 economists.
This compares to the growth in the previous quarter at 12 per cent.
This was according to the advanced estimates by the Ministry of Trade and Industry (MTI).
On a seasonally-adjusted quarter-on-quarter annualised basis, the economy grew by 23.5 per cent.
This is an improvement from the 3.9 per cent growth in the previous quarter.
The
MTI said the strong growth was driven by the manufacturing sector,
particularly in the electronics and precision engineering clusters,
which benefited from a pick up in business investment in the region.
On
a year-on-year basis, the manufacturing sector grew 13.9 per cent,
compared to the expansion of 25.5 per cent in the previous quarter.
The
construction sector grew by 2.6 per cent on a year-on-year basis in the
first quarter, reversing the contraction of two per cent in the
previous quarter.
This mainly reflected an increase in building activities in the residential segment.
The services-producing industries also saw an increase in activities in the first quarter of 2011.
Compared
to a year ago, the services producing industries expanded by 7.2 per
cent, following the growth of 8.8 per cent in the preceding quarter.
Growth was driven by the financial services sector, which saw an increase in commercial bank lending activities.
Trade-related
services such as the wholesale and retail trade, and transport and
storage sectors also expanded, in line with continued growth in global
demand.
The Monetary Authority of Singapore separately said that
economic activity is likely to be sustained at a high level for the rest
of the year - even as domestic cost and price pressures remain firm.
And to contain those pressures, the MAS has further tightened its policy by re-centring the exchange rate policy band upwards.
Strength
of the economy and the policy stance, both caught some analysts by
surprise. Still some economists say they will not be revising their
forecasts as risks remain.
Vishnu Varathan, an asia economist
with Capital Economics, said: "There are three overarching risk factors,
and one is Japan, the calamity in Japan means that we are less certain
about export demand, and second high oil prices. This can have a huge
knock on effect in terms of demand and as well as what it means for the
squeeze on manufacturers.
"And the last factor would be the
European debt crisis, that's still ongoing even though some of the
tensions have receded. That's still a major unknown out there."
-CNA/wk/ac