Singapore's economy grew at a faster than expected pace in the first quarter than earlier thought, data showed on Tuesday.
The city-state's gross domestic product (GDP) expanded an annualized 2.6 percent from the year before, the Ministry of Trade and Industry (MTI) said, beating the advance estimate of 2.1 percent and better than the 2.2 percent forecast in a Reuters poll.
Quarter on quarter, the economy expanded an annualized 3.2 percent, much stronger than the 1.1 percent advance estimate and topping the 1.8 percent print expected.
The figure was boosted by resilience in the manufacturing and services sectors.
Manufacturing activity shrank 2.7 percent from a year earlier, but that was still an upward revision from a 3.4 percent contraction in the advance estimate. Growth in services-producing industries was revised up to 3.8 percent on year from the advance estimate of 3.1 percent.
"The better out-turn was driven by the services sector – led by wholesale and retail trade – which was supported by a surge in exports towards the end of the quarter," according to a note from Barclays.
"Manufacturing output was also not as weak as initially feared, with the q/q contraction in the advance estimate revised to a flat reading," it added.
However, the outlook from the MTI was fairly cautious. While it kept its growth target at 2-4 percent for 2015, it noted the "significant downside risks and uncertainties" in the external outlook, with growth this year "marginally" better than 2014.
"Despite the unchanged official forecast, we suspect MAS sees 2015 growth closer to 2.5 percent (Citi: 2.3 percent), with a small downgrade in official growth forecasts (i.e. around 0.5 percent) not sufficient to trigger an October easing," analysts at Citi said in a note.
Analysts broadly expect some headwinds for the rest of the year, especially as the U.S. and Chinese economies, both key export markets to Singapore, slow.
"We are cautious on the extent to which external demand will support growth through 2015," Benjamin Shatil of JPMorgan, wrote in a note. "We think that rising rates and the slowing property market will continue to weigh on sentiment and bite at domestic activity this year."