Singapore economy slows in first quarter
Singapore economy slows in first quarter
Bernice Han, Agence France-Presse, Singapore
Singapore's economic growth slowed in the first quarter to 2.4
percent, official figures showed on Monday, although economists
said official full-year forecasts of 3.0-5.0 percent remain
achievable.
The Ministry of Trade and Industry said a sharp decline in the
volatile biomedical manufacturing sector was partly to blame for
the subdued start to the year which compared with 6.5 percent
growth in the final quarter of 2004.
On a seasonally adjusted quarterly basis gross domestic
product (GDP) contracted 5.8 percent, according to the MTI
preliminary figures, which are based on the first two months of
the year. Full first-quarter numbers will be released in May.
"Growth of the Singapore economy eased in the first quarter of
2005 as the momentum from last year's economic recovery continued
to subside," the MTI said.
The manufacturing sector recorded annualized growth of 3.0
percent in the first quarter, down from 14.1 percent in the final
three months of 2004.
"Excluding biomedical manufacturing, which saw wide production
fluctuations in the first two months, activity in the
manufacturing sector eased somewhat from the previous quarter but
growth was still healthy," the MTI said.
The struggling construction sector continued to decline in the
first quarter but the contraction of 6.5 percent was slower than
the 8.4 percent fall in the final quarter of 2004.
Services grew 3.5 percent in the first quarter, down from 4.8
percent in the previous three months.
After recording stellar growth of 8.4 percent in 2004, the
government had forecast Singapore's would expand by a more
sustainable 3.0-5.0 percent this year.
Economists said those forecasts were still on track, with
stronger export orders for electronics products expected to start
driving Singapore's economic momentum from the second quarter.
Singapore's trade-driven economy derives a large part of its
wealth from hi-tech exports and signs that the global slump in
the electronics cycle is about to end will be important for the
city-state, they said.
"We could see a rebound in the following quarters," said
Leslie Tang, an economist at UOB Kay Hian brokerage.
"The electronics cycle will bottom out in the second quarter
and we expect a pick-up in the second-half."
Tang is forecasting second quarter growth of 2.8 percent year-
on-year and maintaining a full year projection of 4.5 percent.
Chua Hak Bin, a senior regional economist at DBS Group in
Singapore, agreed that strong electronic orders were expected
throughout the rest of 2005.
"Recent macro data confirms that the slump in global
electronics demand, which started in June last year, is starting
to turn around," Chua said.
"Singapore's electronics industrial production grew 6.9
percent in the first two months of the year, higher than the 5.0
percent registered in the fourth quarter of last year.
"We are increasingly confident that the electronics downturn
is coming to an end and we expect more encouraging signs in the
weeks ahead," Chua said.
Song Seng Wun, regional economist at G.K. Goh brokerage, also
expects a better second quarter performance on stronger exports
of tech-related goods.
"I expect tech exports to stabilize," said Song, who puts
second quarter growth at 10 percent.
UOB Kay Hian brokerage's Tang said high world oil prices were
not a factor in the modest economic start for Singapore.
"We have not really felt the impact (of high oil prices)
yet ... if it stays up we will feel it in the fourth quarter," he
added.