Singapore’s economy shrinks 6.8% in Q4
Singapore’s economy shrank in the last three months of 2009 after surging for two straight quarters, sparking fears of a renewed recession.
The Trade and Industry Ministry said Monday that gross domestic product fell an annualised, seasonally adjusted 6.8 per cent in the fourth quarter, led by a 38 per cent plunge in manufacturing.
The economy grew 3.5 per cent in the fourth quarter from the same period a year ago and contracted 2.1 per cent for all of 2009, the first fall in eight years, the ministry said.
The year “ended with a whimper rather than a bang for the Singapore economy”, said Robert Prior-Wandesforde, senior Asia economist with HSBC in Singapore.
The island’s economy — which relies on trade, finance and tourism — had bounced back from a 12-month recession by growing 15 per cent in the third quarter and 22 per cent in the second. But last quarter’s contraction puts into doubt how solid the recovery is.
The Government is forecasting economic growth of between 3 per cent and 5 per cent for 2010. HSBC expects a 6.5 per cent expansion, Prior-Wandesforde said.
“We still expect a moderate recovery this year,” said David Cohen, an economist with consultancy Action Economics in Singapore. “Some people talk about a double dip, but it’s more likely to be gradual growth in Singapore and the world.”
“Singapore’s trajectory ultimately depends on Asian and global demand.”
Manufacturing was pulled down by poor performance in the biomedical sector, the ministry said. Pharmaceuticals, which are subject to big month-to-month swings in production and account for about a fifth of Singapore’s industrial output, slid 53 per cent in November.
The ministry, which based its preliminary GDP results mostly on data from October and November, said the service sector grew 7.2 per cent from the previous quarter while construction rose 4.3 per cent.
One sign of growing investor optimism in Singapore has been the rebound in housing prices. Private residential property prices rose 7.3 per cent in the fourth quarter from the previous quarter following a 16 per cent jump in the third, the Urban Redevelopment Authority said Monday.
After peaking at a record high in the second quarter of 2008, prices slid 25 per cent over the following year as investors lost confidence amid a global financial crisis.
