Singapore economy grows 8.4% in 2004

Singapore economy grows 8.4% in 2004

Agence France-Presse, Singapore

Singapore's economy grew 8.4 percent in 2004 after posting a surprisingly strong performance in the final quarter, the government said on Thursday even as it maintained its projection for a slowdown this year.

The full-year economic growth numbers were revised upwards from a preliminary figure of 8.1 percent released in January, with annualized growth in the final three months raised from 5.4 percent to 6.5 percent.

However the Ministry of Trade and Industry (MTI) maintained its forecast of 3.0-5.0-percent expansion for 2005, citing high oil prices and a slowdown in semiconductor exports as factors that will limit growth.

Separate government figures released on Thursday showed lower- than-expected exports growth in January due to weakness in the electronics and pharmaceuticals sectors, further highlighting the potential risks for this year.

Non-oil domestic exports growth of 9.0 percent compared with 8.0 percent in December and 16.5 percent in November. The January figure was below analysts' forecasts of 10.2-23.3 percent.

The expansion in 2004 was the Singapore economy's fastest for four years as it came off a low base in 2003, when the Severe Acute Respiratory Syndrome (SARS) crisis led to growth of just 1.4 percent.

The MTI said total demand rose 17.5 percent in 2004, with strong growth on both the external and domestic fronts of 19.6 percent and 11.6 percent respectively.

The manufacturing sector, the mainstay of the city-state's export-dependent economy, grew 14.1 percent in the final quarter of 2004 for a full-year gain of 13.9 percent.

The MTI said a better-than-expected performance in December of manufacturing's biomedical cluster was the key reason for the upward revision in the numbers for the final quarter and the whole of 2004.

The biomedical cluster expanded 25.7 percent in the final three months of the year, according to the MTI.

Singapore's wholesale and retail sector grew 10.7 percent in the final quarter for a full-year expansion of 14.6 percent, more than double the growth rate of 6.7 percent in 2003.

The hotels and restaurants sector, which was heavily hit by the SARS crisis, rebounded from a 9.9 percent contraction in 2003 to post growth of 12.4 percent last year as visitor arrivals hit a record high.

Similarly the transport and communications sector picked up from a 1.8 percent decline in 2003 to record growth of 9.1 percent last year as air traffic numbers rose.

Construction was the only sector to post negative growth for 2004, although the 6.5 percent decline was an improvement from the 9.5 percent contraction in 2003.

Aside from manufacturing and business services, all sectors of the economy recorded weaker growth in the final three months of last year, reinforcing the government's expectations of a more moderate performance in 2005.

"As (the economy) rebounded from a very low base (in 2003), there have already been early indications towards the end of 2004 of a moderation in 2005," the MTI said.

Singapore is a major global supplier of semiconductors and the government cited a report by Gartner research house that world semiconductor growth will slow to 5.2 percent this year from 25.5 percent in 2004.

The MTI said another factor likely to impact Singapore's growth was persistent high oil prices, cautioning that even a minor supply disruption around the world could cause prices to spiral further upwards.

It also warned that the risk of a sharp slowdown in China remained a concern after the world's most populous nation recorded growth of 9.5 percent last year.