The overall GDP growth rate for Q1 was revised to 2.5 per cent from an earlier 2.7 per cent. A more significant revision was made to the construction sector growth rate, where it was revised down to -6.1 per cent from an earlier -1.4 per cent, a 4.7 percentage point difference.
This translates to about S$230 million in constant GDP terms, according to UOB economist Francis Tan’s estimate.
He said the total value-add for the construction sector in Q1 2016 was S$4.815 billion. In 2016, the construction sector made up 5 per cent of Singapore’s economy.
Mr Tan also pondered over what could have caused such a drastic downward revision to the numbers for the January to March period.
In an e-mail reply to queries, a spokesman for the Ministry of Trade and Industry (MTI) said: “Data revisions occur when more comprehensive data becomes available and this is standard practice among national statistical agencies worldwide.”
She also noted that the revision to the year-on-year GDP growth estimate for Q1 2017 can be attributed to a downward revision in the growth estimate for the construction sector.
“Specifically, the construction sector’s growth was revised downwards from -1.4 per cent to -6.1 per cent on a year-on-year basis, as updated data based on more complete survey returns showed that construction activities during the period were weaker than estimated previously.”
Mizuho Bank economist Vishnu Varathan said that revisions to growth rates are not uncommon.
He said: “It’s not the first time it has happened – it is because of the nature of the construction industry, the way the completed work is recognised. That leads to a bit of a lag in recognising the actual value-add, which is fed into the GDP.”
He said the accounting mechanism for recognition, such as of work done and costs incurred, is a lot more real-time for manufacturing and services than it is for construction.
“For example, in the retail sector, you have your point of sale and immediately you know what your sales and costs are – quite easy to compute these things in real time.
“In contrast, for the manufacturing sector, whilst the work is progressing, it is a matter of recognising how much completion is underway, what is the cost incurred and so on and so forth. That is a little bit more tricky.” Thus, he noted that the revisions for the service and manufacturing sectors are not of the same magnitude.
He said: “They are much more calibrated, much more nuanced. Construction is a bit of a quirk due to the nature of the industry.”
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