Singapore construction impresses in Q1
After almost a decade in the doldrums, the construction sector put up its best showing in nine years to grow a sizzling 9.7 per cent in the first quarter of this year, according to figures released yesterday by the Ministry of Trade and Industry.
Growth on a seasonally-adjusted, quarter-on-quarter annualised basis was a solid 22 per cent, while certified payments increased 9.5 per cent, supported by the private residential, commercial and industrial segments and the public residential segment.
Goh Chye Boon, deputy secretary (industry) at the Ministry of Trade and Industry, told reporters at a briefing on Singapore’s first-quarter economic survey results that the government expects ‘quite a strong growth’ in the sector for the rest of the year.
‘We expect construction demand to be on track to hit between $17-$19 billion in 2007,’ he said.
‘This is 12 per cent higher than the $16 billion awarded in 2006. I think the steady build-up in contracts should push growth (in) the quarters to come.’
Growth should be ‘much higher’ than last year and is expected to be ’slightly higher’ than GDP, Mr Goh said.
The government yesterday raised its full-year GDP growth forecast to 5-7 per cent from 4.5-6.5 per cent.
Economists told BT the latest figures show the construction sector has turned around after languishing for years.
‘As a percentage of GDP, the sector will still be quite small, but it could be leading growth for the next few years,’ said Song Seng Wun, regional economist at CIMB-GK Securities.
David Cohen, director of Asian economic forecasting at Action Economics, said the construction sector has obviously turned around but he is unsure how long the present pace of expansion will last. ‘The sector should make double-digit annual growth in 2007,’ he said.
The economic survey results also indicate that total employment grew by 48,000 in the first quarter, only slightly lower than 51,500 in the previous quarter.
‘All major sectors added workers, led by services, with gains of 33,400 workers,’ MTI said in a statement.
Retrenchments in the first quarter fell to 1,800, almost half of the 3,200 in Q4, 2006, though the seasonally-adjusted unemployment rate rose from 2.6 per cent in December 2006 to 2.9 per cent in March 2007, reflecting an ‘increase in labour market entrants on the back of favourable economic conditions’.
On how the impending increase in the rate of GST will affect consumer price inflation (CPI), Khor Hoe Ee, assistant managing director of monetary policy, investment and research at the Monetary Authority of Singapore, said the impact will be minimal.
The GST increase from 5 to 7 per cent is expected to contribute just 0.4 to 0.6 of a percentage point to inflation this year, cushioned by government offsets, he said.
The CPI was 0.5 per cent higher on a year-on-year basis in Q1 2007.
Source : Business Times - 22 May 2007
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