Singapore revises up economic growth forecast

October 11, 2009 10:08 pm 

SINGAPORE, Oct. 12 — The Singapore government on Monday upgraded the country's economic growth forecast for 2009 to minus 2.5 to minus 2.0 percent, up from its previous forecast of minus 6.0 to minus 4.0 percent.

The Ministry of Trade and Industry (MTI) said the Singapore economy expanded by 0.8 percent year-on-year in the third quarter of 2009, compared to a 3.2 percent contraction in the preceding quarter.

On a seasonally-adjusted quarter-on-quarter annualized basis, advance estimates showed that Singapore's gross domestic product (GDP) expanded by 14.9 percent in the third quarter, following a 22.0 percent expansion in the second quarter of the year.

Growth in the third quarter was driven by the continued expansion of biomedical and electronics manufacturing output, and improvements in the trade-related and tourism sectors of the economy on the back of a gradual stabilization in global economic conditions.

The manufacturing sector expanded by 35 percent on a seasonally-adjusted quarter-on-quarter annualized basis, on the back of the previous quarter's spike of 59 percent.

The electronics cluster also grew due to continued restocking activities and uptick in consumer demand for electronic devices.

The services producing industries expanded by 9.5 percent on a seasonally-adjusted quarter-on-quarter annualized basis in the third quarter of 2009, compared to a 8.3 percent increase in the preceding quarter.

The trade-related and tourism sectors improved on the back of a recovery in global trade flows and international travel.

The financial services sector posted modest growth, supported by domestic and offshore non-bank lending and insurance business.

The MTI said a clear but modest recovery is underway globally at least for the next three or four quarters. One-off factors such as restocking activities and fiscal stimulus measures will continue to support growth in the near term.

However, economic activity will probably remain below pre-crisis levels because of the drag on demand in the developed economies posed by high levels of spare capacity and tight credit conditions.

The ministry added a sustained recovery in private consumption and investment in the developed economies is needed to support growth momentum into the second half of 2010.

However, high unemployment and stagnant incomes will weigh down on private demand. Uncertainties over the pace of the withdrawal of monetary and fiscal stimulus measures pose an additional risk.

While these factors may dampen growth in the second half of 2010 and result in an uneven recovery, the likelihood of a return to recessionary conditions is low in the absence of further financial shocks.

The MTI said Singapore's economic prospects in 2010 will be closely tied to the conditions in the external environment.

The manufacturing sector will be supported by inventory cycle adjustments and any uplift in private final demand in the external economies.

Trade-dependent sectors are likely to continue to benefit from a gradual resumption in global and regional trade flows in 2010. (PNA/Xinhua) LDV/ebp

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