Singapore's economy slows sharply in second quarter
Singapore's economy slows sharply in second quarter
SINGAPORE (DPA): Singapore's economy slowed sharply in the second quarter of this year as Asia's economic crisis continued to bite, and the outlook remains bearish, the government announced yesterday.
Gross domestic product (GDP) growth dropped to 1.6 percent in the second quarter, down from 6.1 percent a quarter earlier, the Ministry of Trade and Industry (MTI) said.
The economy slowed "as adverse developments in the global electronics industry impacted our manufacturing engine," the MTI said in an official statement released to the news media.
"Economic growth is expected to weaken further in the rest of the year," the MTI statement said, noting that Japan's recession and the regional slowdown would erode demand for Singapore products and services.
The economic slump hit Singapore's economy across the board in all sectors, the MTI said.
Manufacturing output dropped by 1.1 percent year-on-year in the second quarter, after growing by 6.1 percent in the first quarter.
Electronics, a vital component of resource-poor Singapore's manufacturing, was largely responsible for the drop.
Despite vibrant economic growth in the United States and Europe, "a worsening supply-demand imbalance, sharp price erosion and intense competition" cut Singapore's electronics output by 7 percent in the second quarter, the MTI said.
The construction sector grew by 9.8 percent in the second quarter, down from 14 percent in the first quarter.
Singapore's entrepot trade shrank by 13 percent in the second three months of the year, while visitor arrivals fell by 14 percent.
Growth was slower in transport and communications in the second quarter, and in financial and business services.
Singapore's stock market was hit in the second quarter by "a slew of unfavorable news including uncertainty over the Japanese economic reform, the weakness of the yen, Indonesia's May riots and weak corporate performance," the MTI statement said.
Foreign firms suffer
Meanwhile, the Business Times newspaper reported yesterday that foreign firms in Singapore have been hit by Asia's economic crisis harder than their local counterparts.
The number of foreign firms expecting a second-quarter drop in profits exceeds those that expect a rise by a whopping 68 percent, compared with only 4 percent a year ago, the newspaper said.
The corresponding numbers for local companies were 85 and 49 percent, according to the newspaper's recent study of 157 firms.
Foreign firms had a drop in their sales index of 59 percentage points from a year ago, compared to 49 points for local firms. The index for new business contracted fell 78 points for foreign companies and 58 points for locals.
The survey showed that foreign firm were still performing better than local enterprises, but were seeing a sharper decline.
"Foreign firms did very well before the crisis. So compared to now, the difference in performance is large," Chow Kit Boey, director of Singapore's Center for Business Research and Development (CBRD) told the newspaper.
Foreign firms tended to be larger, with more than half of those surveyed reporting sales of at least 100 million Singapore dollars (US$59 million).
"Small firms ... have been doing badly all along," Chow said. "This probably explains why foreign firms are so pessimistic now."
Two-fifths of the foreign firms surveyed in Singapore were Japanese, while one-fifth were American.
About half of respondents were engaged in manufacturing, while others were from the financial services, business service and commerce sectors.
The survey of foreign and local firms was conducted jointly by the CBRD and the Business Times.