ECONOMISTS are surprised that Singapore's first quarter economic growth slowed more than expected. Singapore's Ministry of Trade and Industry yesterday said Singapore's first quarter gross domestic product (GDP) growth rose 7.2 per cent on an annualised basis, a drop from 8.3 per cent growth in the previous quarter. Last year Singapore's economy grew 10.1 per cent and, although many economists forecast a slight tapering off in expansion, few thought the first-quarter rate would fall below the ministry's forecasts of 7.5 to 8.5 per cent GDP growth for all of 1995. Forecasts for first-quarter GDP growth had ranged from 7.9 to 9.5 per cent. Baring Securities regional economist Kevin Chew said: 'From our perspective, the slowdown is good news.' Like most economists in Singapore, Mr Chew was concerned that continued double digit economic growth could strain the international competitiveness of the economy by pushing up unit labour costs and the Singapore dollar. Smith New Court Securities regional economist Chan Kok Ping said: 'In fact this is the beginning of a slowdown.' Some economists are wondering if the first-quarter lower-than-expected number is part of a trend or just a one-off reaction to a material shortage in the construction sector and the temporary shutdown of some major petrochemical and pharmaceutical plants. The ministry said the slowdown was not unexpected considering the economy grew 10.1 per cent in the past two years. It attributed part of the slowdown to one-off factors. Economists said the big dip in manufacturing growth was a major cause of declining momentum. Manufacturing sector growth was 7.3 per cent on an annualised basis, down from 12 per cent in the last quarter of 1995. The construction and transport and communications sectors slowed, while the financial and business services, and commerce sectors both showed improvements. Total demand for goods and services, up 16 per cent on an annualised basis, was up almost entirely as a result of a 22 per cent increase in external demand. Growth in total domestic demand grew 1.2 per cent on an annualised basis for the quarter. 'Domestic demand has been in kind of a pathetic state for the past few quarters,' Mr Chew said. 'In Singapore, strong growth usually leads to a sharp accumulation in savings, not consumption.' Economists agreed that the weakening United States economy had yet to hit Singapore's exports, which grew 25 per cent per annum in the first quarter as opposed to 27 per cent a year in the fourth quarter of 1994. Singapore continued to experience full employment, with the official unemployment rate at 1.7 per cent, as opposed to 2.2 per cent in the fourth quarter of 1994. Labour productivity increased 2.8 per cent on an annualised basis for the first quarter.