Singapore stuck in 'economic bottoming-out' process: analyst

Seasonal effects dragged growth down.

According to DBS, based on the advance GDP estimates for 1Q13, the economy is likely to have contracted by 1.4% QoQ saar. This translates into a year-on-year decline of 0.6%, down from an expansion of 1.5% in the previous quarter.

Growth momentum appears to be slowing down. But much of this “deceleration” is nothing more than reflecting the highly distorted data over the last two months, due to the Lunar New Year effect.

Here's more from DBS:

In our opinion, the bottom of the current cycle is back in 3Q12 when the economy contracted by 4.6% QoQ saar. As it is, the economy remains stuck in this bottoming-out process as performance remains weighed down by the seasonal and base effect.

The main drag came from the manufacturing sector, which contracted by 11.3% QoQ saar. Beyond the existing seasonal effect, there are signs that this sector could see better performance in the coming months.

A rebound in March manufacturing and export number is expected, judging from the recent turnaround in the PMI numbers. Singapore’s overall manufacturing PMI hit a 22 months high of 50.6.

In addition, key indicators for the electronics industry such as the SEMI book-to-bill ratio and global semiconductor sales numbers are all pointing to an expansion in this industry. Most importantly, a more stable global outlook, juxtaposed with the recovery in China investment will provide the perfect backdrop to a turnaround in the manufacturing sector in the coming quarters.