SINGAPORE - Singapore escaped a technical recession after the economy grew in the
fourth quarter thanks to a boost from services, government data showed
Wednesday, but prospects for 2013 remain gloomy.
Gross domestic product (GDP) rose
by an estimated 1.1 percent year-on-year in the three months to December, from
zero growth in the previous quarter, the Ministry of Trade and Industry said.
Analysts feared the economy may
have slipped into a technical recession -- two successive quarters of
contraction -- after Prime Minister Lee Hsien Loong said on Monday that GDP
rose a mere 1.2 percent for the full year, below the government's forecast of
around 1.5 percent.
Mr Lee also said GDP was expected
to grow just 1.0-3.0 percent in 2013.
"The prospects remain
subdued for Singapore even though we averted a technical recession, and the
weakness in the manufacturing sector underscores that vulnerability," said
regional economist Song Seng Wun of CIMB Research.
On a quarter-on-quarter basis,
the economy expanded by a seasonally adjusted annualised 1.8 percent in the
December quarter, reversing a 6.3 percent contraction in the July-September
period.
Weakness in the manufacturing
sector was a major drag for the economy, but a resilient services sector took
up some of the slack.
"Growth picked up on the
back of firmer service sector activity, outweighing a contraction in the
manufacturing sector led by a weak electronics cluster," said Leif
Eskesen, chief economist for India and Southeast Asia at global banking giant
HSBC.
"The positive impetus
primarily came from wholesale and retail, finance and insurance, as well as
'other' services," he said in a market commentary.
Nomura Securities said in a
market note that manufacturing "remains the weak spot" for the
trade-driven economy.
Manufacturing shrank by an
annualised 10.8 percent quarter-on-quarter in the October-December period as
the European debt crisis and the sluggish US economy dampened global demand for
Singapore's exports, especially electronics.
The sector contracted by 0.2
percent in 2012.
Selena Ling, OCBC Bank's head of
treasury research, said: "What is likely to happen for the first quarter
if not the first half of this year is that manufacturing and export picture
will still remain fairly tepid.
"If you look at the PMI
numbers for Singapore we are not seeing the same kind of rebound that we are
seeing in some of the regional PMI numbers especially for North Asia and China.
So what we think is that as far as the electronics cluster is concerned, it
looks like it will be still fairly slow in the next couple of months."
The services sector rebounded
strongly in the final three months of last year, rising 7.0 percent
quarter-on-quarter from negative growth in the previous two quarters.
Overall, the services sector
expanded 1.2 percent in 2012.
Construction contracted 8.9
percent quarter-on-quarter but grew 8.8 percent for the full year.
Despite Singapore escaping a
technical recession, there was little to cheer about as growth was expected to
be soft in the coming months.
"With global headwinds
expected to remain in place, growth is projected to remain muted in the coming
quarters and not recover more noticeably until the second half of 2013,"
said Eskesen.
Looking ahead, economists said
the government budget will continue to focus on raising productivity and is not
likely to feature many measures to boost growth.
They also expect the Monetary
Authority of Singapore (MAS) to stand pat on its monetary policy during its
policy review in April.
- AFP/CNA/ir
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