May 19, 2022

Singapore Dodges an Expected Recession

SINGAPORE — Singapore’s economy grew in the past three months of 2012, avoiding an expected recession as services put in a strong showing and gross domestic product figures for the first three quarters of the year were revised downwards, data released Wednesday showed.

Singapore, whose trade is equal to about three times its G.D.P., has been badly hit by the weakness in Western economies, which has crimped demand for many of its exports. The city-state’s electronic manufacturers have also failed to tap surging demand for smartphones, unlike rivals in South Korea and Taiwan.

But while manufacturing contracted faster in the fourth quarter than in the third quarter, services rebounded, growing 7 percent in the fourth quarter at a seasonally adjusted and annualized rate. The sector had contracted 3.9 percent in the third quarter.

“The momentum in service sector activity is, of course, not spectacular, but there are at least traces of evidence that conditions are gradually improving,” said Leif Eskesen, HSBC’s chief economist for India and Southeast Asia.

Singapore’s G.D.P. expanded an annualized 1.8 percent in the fourth quarter from the third quarter after seasonal adjustments, advanced estimates from the Ministry of Trade and Industry showed Wednesday, reversing a 6.3 percent contraction in the July-September period.

Compared with a year earlier, Singapore grew 1.1 percent in the fourth quarter, bringing growth for 2012 to 1.2 percent, down from 4.9 percent in 2011. In November, the government had predicted growth of about 1.5 percent.

The surprise growth in G.D.P. during the fourth quarter was primarily the result of downward revisions to data for the first nine months of 2012.

Prime Minister Lee Hsien Loong said in his New Year’s address that the city-state’s economy had been dampened by weakness in the United States, Europe and Japan.

“But some industries have also had difficulty hiring the workers they need to grow,” he added. Singapore has been making it harder for companies to employ low-cost workers from abroad, under pressure from an increasingly assertive electorate that has blamed increasing numbers of foreigners over the past decade for soaring property prices, stagnant wages and increasingly crowded trains and buses.

Most economists had forecast that Singapore’s economy would contract in the fourth quarter, sinking into recession like that of Japan, but their estimates were based on earlier numbers.

According to the advance G.D.P. numbers, Singapore’s manufacturing sector shrank 10.8 percent sequentially in the fourth quarter on an annualized and seasonally adjusted basis, worsening from the 9.9 percent contraction in the third quarter.

The ministry said the recovery in services was helped by a rebound in wholesale and retail trade and finance and insurance.

Manufacturing contributes to a quarter of Singapore’s G.D.P. while services account for about two-thirds of economic activity.

“In the near term, it’s hard to see any improvement in manufacturing,” said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. “Hopefully, services can continue to provide a lift going forward.”

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