Overall GDP growth in for an upgrade after surprise manufacturing uptick

The contraction was smaller than expected.

Singapore’s overall GDP growth figure may be upgraded to reflect the softer-than-expected contraction in the manufacturing sector in the first quarter.

Analysts note that the upside surprise in last weeks industrial production (IP) figure will push overall manufacturing growth in the quarter to -2.5%, up from the advance projection of -3.4%.

“This upward adjustment will likely contribute to an addition 0.2%-pt increase in overall GDP growth. The official preliminary GDP estimate currently stands at 2.1% for Q1,” stated DBS.

However, Bank of America Merrill Lynch noted that the better manufacturing reading might be offset by a slight downward revision in flash estimates of services growth for the first quarter.

“The government may upgrade 1Q GDP growth to +2.2% year-on-year. We however expect a small downward revision in flash estimates of 1Q services growth to partly offset the better manufacturing reading. Overall 1Q GDP growth is within MTI’s full year forecast of 2% - 4%. Our GDP forecast stands at +2.5% for 2015 and +2.8% for 2016,” stated BofAML.