Singapore Gross Domestic Product (GDP) grew 8.3 per cent in the first quarter of 2011 from the same quarter in 2010 (year-on-year basis). When compared with the last three months of 2010, the first quarter 2011 grew a solid 22.5 per cent on seasonally-adjusted annualised basis (quarter-on-quarter basis).
The GDP growth was broad-based with manufacturing sector pulling in an increase of 13.1 per cent year-on-year basis. Financial services grew 11.3 per cent.
On account of a strong performance for the first quarter, the Ministry of Trade and Industry (MTI) has upgraded the GDP growth forecast for 2011 by one percentage point to 5.0 to 7.0 per cent. This was less than half of 2010 phenomenal GDP growth rate of 14.5 per cent. The new forecast for this year will still be a good performance.
Other economic indicators for the quarter include:
1. Consumer Price Index was 5.2 per cent (projection of inflation for whole year is 3 to 4 per cent)
2. Unemployment rate was 1.9 per cent
3. Total trade increased 11.9 per cent
Economy is looking good for Singapore. But there are several downside risks according to MTI. They are
1. sovereign debt problem in Europe
2. increased oil prices due to political turmoil in Middle East and North Africa (MENA)
3. industrial disruption in Japan’s recent natural disaster
4. tight Singapore labour market causing higher business costs.
If the MTI forecast of economic growth for the year is sustained by the end of 2011, then it would translate to good performance by companies based in Singapore on an overall basis. How each company will perform will depend on the management of these companies and also on industry-specific factors affecting those companies. On this basis, manufacturing and financial services will do well in 2011.
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