`Worst is over for Singapore'<\/p>\n
Martin Abbugao, Agence France-Presse, Singapore<\/p>\n
Singapore's economy is showing its first signs of recovery
\nwith an end to a three-month decline in the crucial manufacturing
\nsector offering the greatest cause for optimism, economists said
\non Friday.<\/p>\n
Most economists agreed the June quarter gross domestic product
\n(GDP) would contract because of the impact the Severe Acute
\nRespiratory Syndrome (SARS) crisis had on business confidence and
\nthe travel industry.<\/p>\n
However, they said their hopes for a rebound in the second
\nhalf were buoyed by the news of a marked improvement on the
\nmanufacturing outlook.<\/p>\n
The Purchasing Managers' Index (PMI) for June rose 1.4 points
\non the month to 50.8 points, ending three straight months of
\ndecline, according to the Singapore Institute of Purchasing and
\nMaterials Management.<\/p>\n
A reading above 50 points means the manufacturing sector,
\nwhich accounts for a bulk of total economic output, is expanding.<\/p>\n
DBS Bank economist Lee Wee Liat described the June PMI reading
\nas "the first glimmer of dawn" for the industrial sector and
\noffered a positive forecast for the economy as a whole.<\/p>\n
"We are optimistic about Singapore's second half 2003
\noutlook," Lee said.<\/p>\n
"The June PMI reaffirmed our view that we will see a pick-up
\nin the Singapore economy in the third quarter of 2003,
\nunderpinned by a recovery in our manufacturing sector."<\/p>\n
Lee said GDP should grow 2.6 percent in the three months to
\nSeptember compared with a year earlier and expand 1.6 percent for
\nthe whole of 2003 -- which is within the government's downgraded
\ntarget of between 0.5 and 2.5 percent.<\/p>\n
Singapore's GDP was worth S$155.726 billion (US$89 billion) in
\n2002, according to official data.<\/p>\n
"Given the indications coming out of the United States, we
\nwould expect the PMI to be maintained above the 50 percent level
\nin the near future," Paul Schymyck, an economist with research
\nhouse IDEAglobal, told AFP.<\/p>\n
"It's providing a signal that the worst is over for the
\neconomy."<\/p>\n
The government will release its advance estimates for three
\nmonths to June GDP on July 10 but analysts said the market would
\nbe looking beyond the expected SARS-induced contraction during
\nthe quarter.<\/p>\n
"We are getting clearer signs that the economy is back on the
\nexpansionary trail again," said Schymyck, who also pointed to
\nrobust regional stock markets and an improvement in the housing
\nmarket take-up in Singapore.<\/p>\n
"Of course, recovery also hinges on the U.S.," he said, citing
\nrecent data showing the huge U.S. services sector bounced back in
\nJune, with activity surging to the highest rate in nearly three
\nyears.<\/p>\n
The United States is Singapore's biggest export market.<\/p>\n
Schymyck is projecting growth of 2.5 percent in the six months
\nto December and 1.1 percent for the full year.<\/p>\n
The forecast economic rebound should also boost the Singapore
\ndollar, which has fallen behind its Asian counterparts in terms
\nof strength against the U.S. dollar, he said.<\/p>\n
With SARS now under control in East Asia, consumption is also
\nexpected to pick up and translate into higher orders.<\/p>\n
"As things go back to normal, there is a lot of pent-up demand
\nso production will have to be stepped up," Schymyck said.<\/p>\n
However, not all economists were so upbeat with GK Goh
\nSecurities' Song Seng Wun saying the rebound in electronics in
\nthe PMI index lacked conviction.<\/p>\n
The indicator for the electronics sub-sector improved to 49.7
\nfrom 48.4 in May but was still below the 50-point benchmark.<\/p>\n
"At this point, the June PMI only suggests very modest
\nexpansion in overall manufacturing activity in early third
\nquarter. Nevertheless, we are hopeful that this modest recovery
\nin June orders can be sustained in the coming months."<\/p>",
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