Quick takes: Singapore economy "ran out of steam" in Q1

THE Singapore economy beat estimates to grow by 1.8 per cent year-on-year in the first quarter ended March 31, 2016, unchanged from the previous quarter.

The services sector posted its weakest performance in over a year, while expansion in the construction sector quickened pace, according to the Ministry of Trade and Industry's (MTI) flash estimates released on Thursday morning.

Here are some comments by economists on MTI's figures:

Selena Ling, OCBC

"The Singapore economy ran out of steam in Q1 2016, chalking up no sequential growth from Q4 2015 (+6.2 per cent quarter-on-quarter (qoq) seasonally adjusted annualised basis and the weakest qoq growth since Q2 2015. Manufacturing saw broad-based weakness ... with only a temporary ramp-up in pharmaceutical production in January. We expect the manufacturing slump to extend throughout this year."

"Rapid services deceleration is a cause for concern and could clearly tip the balance for a technical recession ahead."

"The key downside risk was in the rapid deceleration in the services momentum which went from 2.8 per cent year-on-year (+7.7 per cent qoq saar) in Q4 2015 to 1.9 per cent yoy (-3.8 per cent qoq saar) in Q1 2016, marking the first sequential contraction in Q1 2015 and the slowest yoy pace since Q3 2009 (-0.2 per cent yoy)."

"The silver lining in the Q1 2016 GDP was the shining construction sector. The construction industry, notwithstanding the foreign manpower restrictions, actually surged 6.2 per cent yoy (+10.2 per cent qoq saar) and marked its strongest quarter since Q1 2014 (+9.1 per cent yoy and +10.2 per cent qoq saar) on the back of both public and private sector construction activities."

Ng Weiwen, ANZ economist

"The divergence in growth numbers between the services and manufacturing sectors has been unsustainable, and the slowing growth for services you see today is a normalisation."

"Strong growth in construction is not sustainable, as lending to the construction sector has weakened."

"It's difficult to see manufacturing's slower contraction in the context of advance estimates, but if you look at regional purchasing managers' indices, today's slower contraction might be green shoots of an upturn."