Singapore cuts 2004 growth forecast
Singapore cuts 2004 growth forecast
Bernice Han, Agence France-Presse, Singapore
Singapore cut its growth forecast for this year to 8.0-8.5 percent from 8.0-9.0 percent Wednesday following a sharp slowdown in the third quarter and warned of uncertainties on the economic outlook for 2005.
However, the government maintained next year's forecast at 3.0-5.0 percent, with officials and economists saying the general slowdown was not a cause for major concern following a period of very strong growth.
Gross domestic product (GDP) in the September quarter grew at a slower-than-expected rate of 7.5 percent from a year ago, according to the trade and industry ministry.
The figure was down from 12.5 percent in the three months to June and showed an annualized quarter-on-quarter contraction of 3.0 percent, ending four successive quarters of double-digit expansion.
In a separate announcement, the government said non-oil domestic exports, a leading indicator of Singapore's trade- oriented economy, grew 11.9 percent in October after a gain of 16.9 percent in September.
Total trade in October, worth S$52 billion (US$31.5 billion), rose 18.3 percent from a year ago after a 24.4 percent increase in September.
"The moderation of growth going forward is in line with the expected deceleration of the world economy and the global electronics industry next year," the trade and industry ministry's economics director, Friedrich Wu, said.
"However, the outlook for 2005 remains hazy and uncertain."
The ministry said the expected moderation of "robust" growth in the United States would impact Singapore next year, as would slowing economies in China and the other major Asian countries.
It warned that high world oil prices were also an "important risk factor".
"While the world economy is better able to handle the impact of higher oil prices than in the 1970s, further increases could dampen growth nevertheless," the ministry said.
Leslie Tang, an economist with UOB Kay Hian brokerage, said Wednesday's figures showed the city-state was heading back to sustainable growth numbers after a period of extremely strong expansion.
"I think it's going back to a normal trend," Tang said, adding Singapore's long-term growth projection should be around 3.0-5.0 percent a year.
"You cannot be expecting double-digit growth every quarter or there will be overheating."
For the first nine months of the year, the economy grew 9.1 percent as it came off a low base in 2003 due to the impact of the Severe Acute Respiratory Syndrome (SARS) crisis and rode on the flow-on effects of strong world growth.
The government said Singapore was still on track to have the second fastest growth rate in the Asia Pacific this year after China, even after lowering the forecast to 8.0-8.5 percent.
It said the slowdown in the manufacturing sector and ongoing weakness in construction were the main reasons behind the third quarter slowdown.
The manufacturing sector, which accounts for almost a quarter of GDP, expanded 11.5 percent in the September quarter, after 20.7 percent in the three months to June.
On a quarterly basis, the sector contracted 9.4 percent compared with a 31 percent expansion in the second quarter, with lower-than-expected output in the traditionally volatile biomedical cluster the main drag on manufacturing.