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.