Singapore to grow in 2002, but road is fraught with risks
Singapore to grow in 2002, but road is fraught with risks
Agence France-Presse Singapore
Singapore's recession-mired economy is forecast to grow 3.8 percent this year and 7.7 percent in 2003, but the road is fraught with risks, economists from the country's top university said Tuesday.
Gross domestic product (GDP) is projected to continue to shrinking up to the second quarter of this year before turning positive n the second half, the National University of Singapore economists said in a report at a forum organized by the Institute of Southeast Asian Studies.
However, economists Tilak Abeysinghe and Choy Keen Meng tempered their upbeat forecast, saying it depended on a variety of factors foremost of which is the rate of U.S. economic growth this year.
Other factors include the fulfillment of targets for a 6.3 percent growth in the global semiconductor industry in 2002 and 21 percent in 2003, stable oil prices and foreign exchange rate, they said.
"We predict a recovery to positive growth of about four percent this year -- contingent on a steady pick-up of economic activity in the U.S. and other key trading partners of Singapore, and a rebound in global electronics demand," the report said.
"At worst, the Singapore economy will register flat growth in 2002," it added.
The government is forecasting the GDP to growth between minus 2.0 and plus 2.0 percent this year, from a 2.2 percent contraction last year. GDP grew by 9.9 percent in 2000.
The report warned "the possibility of a worst outcome cannot be totally discounted -- all it needs is a couple of downside surprises which are beyond Singapore's control to grip the economy into another year of recession."
Another risk factor is an "illusory recovery" in demand for electronics products, Singapore's main exports.
While industry-based sales forecasts are robust, "the speed and the strength of the rebound in global electronics demand is subject to considerable uncertainty," the report said.
Other risks to an economic recovery include an over-investment in information technology, a deadlock in the U.S. Congress over pump-priming measures and a repeat of the Sept.11 terrorist attacks in the United States, the report said.