Singapore roared back from recession in the first quarter, the government said Wednesday, as it sharply raised its economic growth forecast and tightened monetary policy to check inflation. Preliminary estimates showed first quarter gross domestic product (GDP) expanded 13.1 percent from a year ago and 32.1 percent on a quarter-on-quarter seasonally adjusted basis, the Ministry of Trade and Industry said.
The strong results prompted the ministry to upgrade its growth forecast to 7.0-9.0 percent this year from the previous 4.5-6.5 percent. Trade-reliant Singapore's revised growth target comes amid signs that the global economy is continuing to recover from the financial and economic crisis that struck in late 2008 and extended well over into last year.
Singapore's economy, the first in Asia to slip into recession, contracted 2.0 percent last year as the crisis hammered demand for its exports. Banking giant DBS said the 32.1 percent quarter-on-quarter expansion "will go down in the history book as the strongest quarterly growth ever recorded" for the affluent city-state.
The surge also marked a strong turnaround from the same period last year, when GDP shrank 9.4 percent annually and 7.1 percent from the previous three months. Singapore's Straits Times Index closed 1.62 percent higher at 3,019.74 on Wednesday as the stock market cheered the news. Manufacturing led the way with a 30-percent year-on-year expansion in the first quarter as external demand for information-technology-related products improved.
Construction grew 11.3 percent annually and services-producing industries surged 8.4 percent, the trade ministry said. The Monetary Authority of Singapore (MAS) on Wednesday announced it was adopting a tighter monetary policy stance to tame inflation as the economic recovery gains traction. Singapore's monetary policy is conducted via the local currency, which is traded against a basket of currencies of its major trading partners within an undisclosed band known as the nominal effective exchange rate.