Singapore averted recession with the gross domestic product (GDP) growing 1.8 per cent in the fourth quarter compared with the third quarter when it shrank 6.3 per cent. If the GDP had shrunk for two quarters in a row, the economy would have been in a technical recession.
Analysts had been speculating Singapore had slipped into a recession after Prime Minister Lee Hsien Loong announced in his New Year message two days ago that the economy had grown 1.2 per cent in 2012 – lower than the 1.5 per cent forecast
The manufacturing sector – once the crown jewel of the economy – continued to be the Achilles heel, contracting for the third quarter in a row. The construction industry shrank for the second successive quarter. Singapore is becoming a service economy which depends on tourists, shoppers and the finance and banking industry. The services sector grew 7 per cent compared with the previous quarter after two straight quarters of negative growth.
The Trade and Industry Ministry reported today:
Based on advance estimates, the Singapore economy grew at a modest pace of 1.1 per cent on a year-on-year basis in the fourth quarter of 2012, an improvement from the flat growth in the previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 1.8 per cent, an upturn from the contraction of 6.3 per cent in the preceding quarter.
For the whole of 2012, the economy is estimated to have grown by 1.2 per cent. This is slightly lower than MTI’s growth forecast of around 1.5 per cent, as the weakness in the manufacturing sector continued to weigh down on the economy.
On a year-on-year basis, the manufacturing sector contracted by 1.5 per cent in the fourth quarter, following the 1.6 per cent decline in the preceding quarter. On a quarter-on-quarter basis, the sector contracted by an annualised rate of 10.8 per cent, extending the 9.9 per cent decline in the previous quarter. This largely reflected the continued weakness in the output of the electronics cluster.
The construction sector grew by 5.9 per cent on a year-on-year basis, moderating from the 7.7 per cent growth in the preceding quarter. On a quarter-on-quarter basis, the sector contracted by an annualised rate of 8.9 per cent, mainly due to the decline in private sector building activities.
The services producing industries grew by 1.5 per cent on a year-on-year basis, up from the growth of 0.2 per cent in the previous quarter. On a quarter on-quarter basis, the services producing industries grew by an annualised rate of 7.0 per cent, reversing the 3.9 per cent contraction in the preceding quarter. This was largely due to the rebound in the wholesale & retail trade, finance & insurance sectors, as well as other services industries.