Singapore Q4 GDP in first fall since Q2 2003
Singapore Q4 GDP sees first fall since 2003
SINGAPORE, Jan 2 (Reuters) - Singapore's economy shrank an annualised, seasonally adjusted rate of 3.2 percent in the fourth quarter, the first contraction since 2003, as weak manufacturing activity dragged on growth, data showed on Wednesday. The rate compared with a revised 4.4 percent expansion in the third quarter and was the weakest performance for the trade-dependent economy since the second quarter 2003.
KEY POINTS:
- Compared with a year earlier, gross domestic product rose 6.0 percent.
- The economy grew 7.5 percent in 2007, slightly slower than the 7.9 percent in 2006.
- Economic growth is expected by the government to slow to between 4.5-6.5 percent this year.
COMMENTARY:
SELENA LING, ECONOMIST AT OVERSEA-CHINESE BANKING CORP "Many economists expected a slowdown but not a negative number. The alarming bit is manufacturing, which slowed from double-digit growth in Q3 to 0.5 percent year-on-year. We have to look closely at Q1 growth to see if there will be a continuation of the slowdown. "I don't think construction can continue the pace. The fourth quarter growth was partly off a low base in Q4 06. For 2008, to continue growing at a fast double-digit pace is going to be tough."
DAVID COHEN, ECONOMIST AT ACTION ECONOMICS
"It was weaker than what anyone had expected and it will raise some concerns about the current trajectory. People had expected a milder contraction, and were still expecting a positive number quarter-on-quarter. This signals we are going to see some slowing in growth across the region, which is in line with all the turmoil in financial markets. "Still, the final number might get revised higher because this is based on the first two months of data from the quarter. "The central bank will be satisfied to remain steady with their current trajectory with the appreciation of the Singapore dollar. There were some thoughts that with the pick-up in inflation, they might quicken the appreciation of the Singapore dollar, but with slower growth, they are likely to keep their current stance."
CHUA HAK BIN, ECONOMIST AT CITIGROUP
"It's very clear that we are no more a fairy-tale economy. Inflation is back, growth is slowing down and the labour market is very tight. These are going to be testing times. "The weakness appears to be from the manufacturing side. But with December numbers in I expect an upward revision when the final figures come in."
MARKET REACTION:
- The Singapore dollar was trading at 1.4402/4412 to the U.S. dollar after the data, compared with 1.4399 before the release.
- Singapore's share market was not open when the GDP data was announced. The Straits Times Index <.STI> ended Monday's session up 1.06 percent at 3,482.30 points.
BACKGROUND:
- The government had forecast 2007 growth of 7.5-8 percent. Market forecasts for 2007 growth centred on 8 percent.
- Asian economies, many of which rely on exports, are bracing for a slowdown in growth in 2008 as a housing downturn takes a toll on the United States -- Asia's top export market.
- Singapore's growth is largely fuelled by manufacturing of goods such as electronics, pharmaceuticals and oil rigs. However, the economy is leaning more on other sectors, such as tourism, financial services and construction, to underpin growth.
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Source-
http://forum.channelnewsasia.com/viewtopic.php?t=116315