The Singapore economy grew 1.2 per cent in the 2012, averting a widely feared technical recession in the fourth quarter when the gross domestic product rose 1.8 per cent from the previous quarter. How? The answer is simple.
The hawker stall assistant, the salesgirl, the hotel cleaner, the delivery man, the property agent, the technician and, yes, the bankers collectively contribute more to the Singapore economy than the factory operators, construction workers and engineers. The city-state is becoming a service economy where “goods-producing industries”, including manufacturing and construction, account for just about one-third of the total gross domestic product.
This was their share of the 2011 GDP, and we will see the same pattern in earlier years and the first three quarters of 2012.
That is why there was no recession despite a continuing slump in the manufacturing and construction sectors. Manufacturing dropped for the third quarter in a row, down 10,8 per cent from the previous quarter, while construction fell for the second quarter, down 8.9 per cent. And yet the economy beat back recession on the back of a resurgent services sector. After falling two quarters in a row, the services sector gained 7 per cent. That was enough to avert a recession.
Let’s look at the math. The Ministry of Trade and Industry, giving its preliminary estimates today for the fourth quarter, supplied no actual figures, It merely indicated by what per cent output had risen or fallen in each sector, The mainstream media faithfully reported what the ministry said. I am yet to see online any mainstream media report explaining how a recession was avoided. So I asked myself how could a 7 per cent growth in the services sector wipe out a 10,8 per cent slump in manufacturing and an 8.9 per cent drop in construction?
The only way to find out was to check the figures for the previous years. And those figures showed manufacturing and construction together made up about a third of the Singapore gross domestic product. Services accounted for the remaining two-thirds. So a resurgent services sector offset the declining manufacturing and construction industries.
Here are the figures for the previous years.
|GDP at 2005 market prices||251,374.0||248,911.2||285,658.5||299,624.7|
|Goods producing industries||73,465.3||72,467.9||90,392.9||96,506.8|
The goods-producing industries, including manufacturing and construction, continued to make up about a third of the GDP in the first three quarters of 2012, so there is no reason to expect a change in the fourth quarter,
|GDP at 2005 market prices||75,153.1||76,469.6||76,201.4|
|Goods producing industries||23,946.9||24,809.4||25,004.7|
All figures, in millions of Singapore dollars, are taken from the statistical tables of the Economic Survey of Singapore.