Singapore's economic growth is likely to improve in the coming quarters of this year supported by healthy export demand, Krystal Tan, an economist at Capital Economics, said Thursday.
Official data released earlier this week showed that GDP expanded 2.7 percent yearly in the first quarter, slightly slower than the 2.9 percent rise in the fourth quarter.
Nonetheless, it was above the 2.5 percent increase reported in the advance estimate released in April.
Quarter-on-quarter, the economy contracted a seasonally-adjusted 1.3 percent in the first quarter, smaller than the 1.9 percent fall reported in the flash data.
"Looking ahead, improving global demand suggests that the export-oriented Singapore economy will continue to do reasonably well in the coming quarters," the economist commented.
Tan also expects a supportive fiscal policy to help the economy in the near future. The government has pencilled in a basic deficit of 1.9 percent of GDP in its budget 2017, up from 1.4 percent the year before.
The economist observed that healthy public finances gives the government scope to provide further support to economic activity if needed.
However, Tan expects the pace of recovery to be constrained by other factors. Local interest rates have started to rise in recent months and likely to climb further if the US Federal Reserve will hike rates more than markets anticipate in 2017 and beyond, she said.
Higher borrowing costs are likely to act as a drag on household and business spending and dampen construction activity, the economist added.
"Overall, we are sticking with our 3 percent growth forecast for 2017, which is at the upper end of policymakers' 1-3 percent forecast range," the economist predicted.
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