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.