Singapore's economy grew at a faster-than-expected pace in the first quarter, government data showed on Tuesday, even as the central bank surprised markets by announcing no change to monetary policy.
Gross domestic product (GDP) grew an annualized 2.1 percent in the three months to March from the year-ago period, stronger than the 1.8 percent forecast in a Reuters poll and after expanding by the same margin in the fourth quarter.
Quarter on quarter, growth edged up 1.1 percent, also beating the 0.5 percent estimate but much lower than the 4.9 percent expansion in the previous quarter.
The manufacturing sector was the main drag on growth. Industrial production in January and February shrank on average by about 1.2 percent from a year earlier, while a survey of purchasing managers showed manufacturing activity shrank in March for a fourth straight month.
"It's been a pretty dismal picture as far as exports are concerned. For an economy to come up with positive growth solely driven domestic demand, which is the challenges these days for advanced economies, Singapore seems to be doing okay," Taimur Baig, chief economist for Asia at Deutsche Bank, told CNBC.
The Monetary Authority of Singapore, the country's central bank, said GDP is on track to grow 2-4 percent for the full year and pledged will maintain the policy of modest, gradual appreciation of the Singapore dollar.
The central bank manages monetary policy by letting the Singapore dollar rise or fall against a basket of major currencies within an undisclosed trading band – this is called the Singapore dollar nominal effective exchange rate, or NEER.