S'pore economic growth to slow

S'pore economic growth to slow

SINGAPORE (AFP): The Singapore economy is expected to expand by a much slower pace of 2.6 percent year-on-year in the last quarter of 1996 for a projected annual six percent growth, government officials said yesterday.

The economy had expanded by 3.2 percent in the third quarter, the city state's worst growth rate in a decade, due to weakness in the crucial manufacturing sector, they told a media briefing.

Trade-driven Singapore's gross domestic product growth in the first quarter was 11.4 percent and 7.5 percent in the second quarter.

Some analysts had earlier projected that fourth quarter growth could dip to as low as 1.9 percent.

"The government is not coming up with a public position on the fourth quarter figure but mathematically speaking it should be 2.6 percent," an official of the Ministry of Trade and Industry told AFP after the briefing.

He said that the figure was derived after considering the government's six percent annual growth forecast for 1996 as well as the performance of the economy over the last three quarters.

The government had forecast that the economy would expand by 7.5 percent to 8.5 percent in 1996 but in August revised it to seven to eight percent.

The officials said yesterday that economic growth in the third quarter was brought down by a broad-based weakness in the key manufacturing sector.

Manufacturing posted its first negative growth of 4.3 percent in four years during the July-September period. The last time Singapore's manufacturing sector posted negative growth was in the first quarter of 1992.

Singapore had been hit by a global slowdown of the electronics industry, the lynchpin of manufacturing, triggered by softening of demand, excess capacity and an oversupply of components like chips.

The electronics industry, which grew at an explosive rate of 23 percent and 12 percent in the first and second quarters respectively, posted a negative 1.7 percent growth in the third quarter.

Figures released at yesterday's briefing showed production dipping in all the key manufacturing industries during the July- September period, with the notable exception of petroleum refining.

Singapore's most recent recession was in the mid-1980's when GDP growth turned negative for the whole of 1985 and the first quarter of 1986.

Economic growth recovered into positive territory of 1.4 percent in the second quarter of 1986, 4.1 percent in the third quarter and seven percent in the final quarter. Since then growth had not fell below four percent.

Singapore's economy grew by 8.8 percent in 1995 and more than 10 percent in each of the previous two years.