Singapore Q1 GDP barely grows, outlook dim as exports forecast cut

By Jongwoo Cheon and Saeed Azhar

SINGAPORE (Reuters) - Singapore economy barely grew in the first quarter, while a downgrade in trade and exports forecasts as well as a depressed services sector underscored a weak outlook for the trade-dependent city state.

The economy expanded 0.2 percent in January-March period from the previous three months on an annualised basis, the Ministry of Trade and Industry said on Wednesday in a statement.

The government in April initially estimated that the city-state's economy stalled in the first quarter. The median forecast in a Reuters survey last week also predicted the city-state's economy failed to grow in January-March.

Like many of the region's trade-reliant nations such as Japan, South Korea and Taiwan, Singapore has been hit hard by a global downturn in demand, with a cooling in China - the city state's biggest export destination - rippling across producers of a broad range of consumer items to soft and hard commodities.

Last month, Singapore's central bank unexpectedly eased its exchange-rate based monetary policy settings as slumping global demand put the screws on the city-state's key manufacturing sector and undermined a fragile recovery.

"The picture hasn't changed very much with revision of the Q1 numbers," said Selena Ling, an economist at OCBC Bank in Singapore.

"If you look at services, it decelerated even faster than what was estimated in the flash. That for us is an area of concern. The revision of NODX downward is just a reflection of the China drag and regional demand not being there,"

The city-state's trade agency on Wednesday revised down its forecasts for this year's trade and exports. International Enterprise Singapore said in a separate statement that it cut its forecast for 2016 total trade to between -8.0 to -6.0 percent, while lowering non-oil domestic exports forecast to between -5.0 to -3.0 percent.

Singapore economy grew 1.8 percent in the first quarter from a year earlier, same as the government initial estimates and economists' forecast.

The ministry maintained its forecast for this year's growth at 1.0-3.0 percent.

The service sector contracted a revised 5.9 percent in the first quarter from the previous three months, more than a 3.8 percent contraction estimated earlier.

It was the sector's first quarterly contraction since the first quarter of 2015.

The city-state's manufacturing sector rose a revised 23.3 percent on-quarter, stronger than the initially estimated 18.2 percent growth.

(Additional reporting by Saeed Azhar; Editing by Shri Navaratnam)