Schroders predicts S'pore GDP growth at 5 percent
Schroders predicts S'pore GDP growth at 5 percent
SINGAPORE (Reuter): Schroder Securities Asia has cut its
forecast for growth in the Singapore economy this year to 5
percent from 5.7 percent.
Schroders said in its weekly Asian Highlights report, received
by Reuters on Wednesday, that the city-state's most recent trade
figures had been much weaker than consensus and the next few
months would reveal "an even more bleak export outlook".
It said Singapore's non-oil domestic exports dropped by 0.9
percent in value terms in May after rising 5.8 percent in April.
Consensus expectations had been for a four percent rise.
"We have downgraded our 1997 GDP (gross domestic product)
forecast from 5.7 percent to five percent and our new 1998
forecast is 5.4 percent," it said.
The forecast by Schroders, an arm of investment bank Schroders
Plc, is well below predictions by most other economists and
analysts, which tend to average between six and seven percent
growth for 1997.
The government's own official forecast is for an expansion of
five to seven percent in GDP.
Singapore's GDP grew by seven percent in 1996, 8.8 percent in
1995 and by double-digits in the preceding two years.
Schroders said it saw little good news on the horizon.
"In the electronics sector (which accounts for almost 60
percent of manufacturing output), final demand has been weaker
than manufacturers' expectations, and with the current
overcapacity in the key disk-drive segment, production and export
values will slow," it said.
"Looking forward to 1998, it is difficult to see where growth
will come from. We expect global demand to cool off both in the
G-7 countries as well as in Asia as we go into 1998. For an
externally driven economy like Singapore, there will hardly be
any external props," it said.
It said consumers would be unable to take up the slack because
they would be increasingly squeezed as personal gearing continued
to rise.
"These cyclical problems will compound the ongoing structural
problem in Singapore. There is an ongoing hollowing out of
manufacturing industry to lower-cost locations, especially in the
consumer electronics sector and in the low-end disk drive
production."