Singapore's economy grew 2.6 percent in Q1, a boost from 2.1 percent from the last quarter. GDP also rose to an annual 3.2 percent in the first few months, exceeding a previous government forecast of 1.1 percent in April. The increased growth is attributed to stronger exports and increasing U.S. demand.
Singapore displayed its best non-petroleum export performance in three years, growing 4.8 percent year-on-year in Q1. However, merchandise trade dropped 10.5 percent, an increase from last quarter's 4.8-percent slump, and the food and tourist industries suffered quite a bit due to a slowdown in tourist visitations. Regardless of the setbacks, Singapore is poised for growth in the long-term because of improved growth globally, including the projected expansions of the finance and insurance sectors.
Singapore's construction sector received a boost as well, jumping 12.9 percent. Construction received a pickup from commercial building projects in the private sector, and projects in the public sector will continue to prop up the industry throughout the year. The manufacturing sector expanded .02 percent in Q1, undergoing a slight drawback in such areas as biomedical manufacturing and engineering. The pharmaceutical industry in particular is an unknown factor in the economy because of its unpredictable nature, according to research from the Bank of Tokyo-Mitsubishi UFJ. Further, industrial production was one reason that prevented Singapore from growing further, with factory output shrinking at its worst pace since 2013, falling 8.7 percent year-on-year in April. The Ministry of Trade and Industry downgraded Singapore's GDP to a range of 2.0 to 4.0 percent each year until 2020. The government had envisioned a higher growth rate of 3.0 to 5.0 percent until the end of the decade. However, the downgrade is not wholly attributed to the manufacturing sector but other factors, such as an aging population and uncertainties in the world economy.
Overall, the government is embarking on a strategy of slower and steady growth for the remaining decade. Currently, Singapore does not intend to relax foreign worker restrictions to boost the economy, and people entering the workforce may have to temper expectations regarding salaries, but job market restrictions will keep wage adjustments higher. The government is on track to achieving its productivity growth period from 2009 to 2019 at a range of 2.0 to 3.0 percent, but officials expect to hit the lower end of the scale. This falls in line with the government's overall restructuring plan as leaders contend with a shaky global market, and analysts expect this sort of growth to be a regular occurrence going forward.