East Asia gloom deepens as S'pore heads into recession

East Asia gloom deepens as S'pore heads into recession

SINGAPORE (AFP): The storm-clouds gathering over East Asia's
export-led economies darkened Saturday when Singapore reported an
0.8 percent contraction of its manufacturing sector in April.

The decline in the sector followed year-on-year growth of 13.3
percent in February and 6.4 percent in March, according to
government figures.

The figures, which the city state's Economic Development Board
(EDB) said largely reflected a collapse in demand for electronics
exports, particularly from the United States, confirmed fears
that Singapore's economy is headed for a recession.

They will also add to the broader sense of gloom in the
region, coming a day after similarly pessimistic data from Taiwan
and Hong Kong.

Taiwan announced on Friday that growth had slumped to a 26-
year-low of 1.1 percent in the first quarter. Hong Kong reported
growth of just 0.3 percent in the same period and slashed its
forecast for the year as a whole from 4.0 to 3.0 percent.

Electronics account for 55 percent of Singapore's exports and
the sector has been hit hard by the slowdown in the US, where
latest economic figures suggest the economy ground to a virtual
standstill in the first three months of the year.

With the slump in April, growth in manufacturing output for
the first four months of the year was at a marginal 1.6 percent,
the EDB said in a statement.

The electronics sector dipped 8.8 percent April, leading an
almost across-the-board decline. The electronics industry
contracted 1.4 percent in the January to April period.

Only the fledgling biomedical sciences sector, which is being
developed to reduce dependence on electronics, bucked the trend,
posting a 64.9 percent increase in output.

"Reflecting the worldwide downturn in demand for
semiconductors, output of chips was depressed due to weak
orders," the EDB said.

"The output of telecommunications equipment continued to slide
because of poor demand from Asia Pacific market. Output of disk
drives was reduced due to slackened demand and erosion of
prices," it said.

The chemicals cluster contracted 0.9 percent, with mild growth
in petroleum and petrochemicals output failing to offset a 7.9
percent drop in the production of specialty chemicals.

The engineering group fell 1.0 percent due to a 14.4 percent
decline in precision engineering.

Biomedical sciences saved the day for the manufacturing
sector, rising almost 65 percent. Pharmaceuticals surged 87.2
percent and medical devices output was up 12.1 percent.

In a survey by the EDB of business expectations published
earlier this month, 29 percent of industrialists expected
conditions to deteriorate over the next six months, while just 10
percent saw an improvement.

Singapore's gross domestic product (GDP) growth slowed to 4.5
percent in the first quarter, from 11 percent in the last three
months of 2000.

Trade ministry chief economist Tan Kong Yam said earlier this
month that second quarter GDP would be weaker than the first and
admitted that a technical recession -- two consecutive quarters
of falling output -- was on the cards.

The ministry has however maintained its full year growth
forecast of 3.5-5.5 percent with a recovery expected in the
second half of the year in tandem with an expected US economic
revival.

Private sector analysts are not so confident and have warned
the government may have to slash its annual forecast and that any
pickup will not come before next year.