Electronics slowdown may affect S'pore

Electronics slowdown may affect S'pore

SINGAPORE (DPA): A global electronics slowdown could cut 2.3 percentage points off Singapore's GDP growth this year, with negative spillover effects on finance and business services, a study said on Thursday.

Worries of another dip in the electronics cycle have mounted following recent signs of weak sales, depressed semiconductor prices and profit warnings from major U.S. companies.

The simulation study by the Monetary Authority of Singapore (MAS) and published in The Business Times said in the event of a global slowdown, defined as a 7-8 percent contraction in semiconductor sales, the city-state's GDP growth could slip to 2.7 to 4.7 percent.

The Ministry of Trade and Industry's GDP forecast for 2001 is 5 to 7 percent.

MAS' base scenario sees global computer chip sales growing 10 to 15 percent, a slowdown from an estimated 37 percent growth last year.

The study notes, however, a massive capacity buildup last year coupled with an unexpected moderation in demand could lead to a glut in the industry early this year.

"At this stage, we assign a relatively low probability to the electronics shock," the MAS said, with any downturn probably less severe than previous episodes in 1998 and 1996 as the industry is more responsive to changes in demand.

Overall demand in 2001 would also be supported by end-markets such as Internet infrastructure, wireless communications and digital consumer applications, the MAS said.