GDP tipped to rise in Q1 due to export growth
The country’s gross domestic product is expected to accelerated to 3.3 per cent year on year in the first quarter and up from 3 per cent in the fourth quarter last year, according to new research by DBS Bank.
The boost is likely to have come from export growth, the bank said.
Exports of goods were up by 4.9 per cent in the first quarter, sustaining the recovery seen since the third quarter of last year, it said.
“Stronger export demand of manufactured goods provided the much-need spark to the sector, which has largely underperformed since 2013. At the current pace, export growth is on target to reach our expectation for a 6.6 per cent print in 2017,” it said.
“We are unlikely to see significant changes in private sector domestic demand though. Signs have continued to point towards private consumption growing at sub-3 per cent pace in the quarter.
“Core inflation remains below 1 per cent, indicating that low demand-pull inflationary pressures. Wage growth appears somewhat sticky at around 2 per cent annual pace. And despite strong imports growth in the first quarter of this year, note that most of it was due to the demand for intermediary goods, rather than consumer/capital goods. Improved export earnings seem to have little impact on consumption demand for now.”
DBS Bank said no marked improvement is likely to be seen in private investment growth as well
It said the monthly investment index has continued to move sideways, suggesting that little has changed in recent months.
“Given that both fiscal and monetary policies have continued to be accommodative, however, it is still interesting to see if private investment growth might have maintained its gradual recovery. If full-year private investment growth were to exceed 3 per cent, a slight upward revision to our 2017 GDP growth forecast of 3.4 per cent may be in the offing,” it said.
