Singapore economy weakens in Q4

Singapore's economy has shrunk a bigger-than-expected 6.8 per cent in the fourth quarter, led by a 38 per cent plunge in manufacturing. 

• The trade and industry ministry said on Monday that gross domestic product (GDP), fell an annualised, seasonally adjusted 6.8 per cent in the October-to-December period.
• But compared to the same period a year ago, the economy grew 3.5 per cent in the fourth quarter and contracted just 2.1 per cent for all of 2009, the ministry added, numbers largely in line with economists’ recent forecasts and much better than earlier expected.
• The country’s economy – which relies on trade, finance and tourism – had bounced back from a 12-month recession by surging the last two quarters: growing 22 per cent in the second quarter and a revised 14.9 per cent in the third.
• Analysts polled by the Reuters news agency had predicted GDP to fall just 0.8 per cent in the December quarter – instead of the 6.8 per cent.
• Sluggish private sector.
• Song Seng Wun, an economist at CIMB in Singapore, told Al Jazeera that the weaker figures in the fourth quarter were due to a pullback in manufacturing, especially from the volatile pharmaceutical sector, and were “a reminder that we shouldn’t take the recovery as a straight line for granted”.
• Benjamin Pedley of LGT Investment Management, said that while a pullback was recorded, “the trend for 2010 remains one of economic recovery”.
• “However, recovery will not be unbridled this year and there will be some downturns,” he told Al Jazeera.
• Meanwhile, there was brighter news in construction, which grew a seasonally adjusted and annualised 4.3 per cent from the previous quarter, and in the service industries, which expanded by 7.2 per cent.
• Song said he expected the economy to rebound strongly in the first half of 2010, but the second half’s outlook was less clear.
• He said there were continued signs of recovery, but mostly still led by government spending, with private sector spending remaining sluggish.
• “Until we see the private sector ready to take over as the engine of growth, it’s probably a bit premature to celebrate,” he said.
• That view was echoed by Teng Theng Dar, chief executive of the Singapore Business Federation, which has a membership of more than 15,000 companies.
• “For 2010, everyone seems quite comfortable about the first and second quarters, but beyond that there is no consensus,” Teng told The Straits Times newspaper in Singapore.
• The government is forecasting economic growth of between three and five per cent this year.