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.