S'pore GDP grows fast
S'pore GDP grows fast
Bernice Han, Agence France-Presse, Singapore
Singapore's economy posted its fastest quarterly expansion in
10 years as exports boosted growth in the June quarter to 12.5
percent from a year ago, lifting the full 2004 forecast to 8.0-
9.0 percent, the government said on Tuesday.
But gross domestic product (GDP) growth is expected to slow to
3.0-5.0 percent in 2005 due to the exceptionally high base this
year and moderation in global electronics demand, the Ministry of
Trade and Industry (MTI) said.
"The moderation of growth in 2005 is in line with the expected
deceleration of the world economy and global electronics
industry," Friedrich Wu, director of the MTI's ecomomic division,
told a media conference.
"In addition, the very robust expansion of the economy in 2004
will imply slower growth next year partly attributable to the
high base effect," he said.
The revised 2004 growth estimate means the economy is on
track to be one of the fastest-growing in Asia this year after
expanding a mere 1.1 percent in 2003. The previous 2004 forecast
was 5.5-7.5 percent.
Growth in the second half is likely to come in at 6.0-8.0
percent after expanding 10 percent year-on-year, Wu said.
"We believe that the revised growth range is credible and
realistic because even if quarter-on-quarter growth in the third
and the fourth quarters were to be zero compared to double-digit
rates in the first and second quarters, full-year growth would
still reach 8.5 percent," Wu said.
Wu said the lower end of the revised growth forecasts factored
in the "unlikely possibility" of the last two quarters of 2004
remaining in neutral territory.
The factors that pushed the economy to dizzying heights in the
first six months of the year, namely strong export orders for
electronics and solid global economic conditions, will remain the
key growth drivers for the rest of the year and also in 2005, Wu
said.
Moreover, the composite leading index, which tracks economic
activity six to nine months ahead, increased for the fifth
straight quarter in the three months to June.
"This is good news for a trade-dependent economy," Wu said.
"The series of gains in the leading index suggests that the
momentum of growth will remain strong well to the end of this
year."
This year's rebound comes off a low base in 2003 resulting
from the economic impact of the Severe Acute Respiratory Syndrome
(SARS), a flu-like epidemic which grounded the travel industry
and crippled retail and other sectors as well in East Asia.
Manufacturing was again the star performer as the sector
accelerated by 20.6 percent in the June quarter from a year ago,
eclipsed only by the hotels and restaurants sector which surged
37.6 percent.
On a quarterly basis, the sector grew 30.3 percent compared
with a rise of 12.3 percent in the first quarter.
Robust export demand for electronics and biomedical products
is not expected to ease up in the second half, which bodes well
for the manufacturing sector, the backbone of Singapore's S$90-
billion economy.
"The continuing growth momentum suggests that the recent
strength of manufacturing output will be sustained in the second
half of 2004," Wu said.
All other sectors of the economy also expanded in the June
quarter except for the construction industry, which fell 5.1
percent.
Private economists were however less bullish, saying the
manufacturing sector was highly vulnerable to a weakening in
demand for electronics products especially from the United
States.
"I think the numbers are a little bit too aggressive," Joseph
Tan, economist at Standard Chartered, said of the revised growth
projections.
"Growth will invariably slow down in the second half... oil
prices being above S$40 pose significant risk to Asian
economies," he said.
Tan said he was maintaining his 7.6 percent growth forecast
for the Singapore economy this year.