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Singapore's economy may have contracted by 16%, say economists
By Chris Howells | Posted: 13 October 2010 2215 hrs
SINGAPORE: Singapore's economy may have contracted by 16 per cent on-quarter, which would be the biggest fall on record. The manufacturing sector, led by pharmaceuticals has slowed, following the rapid growth of the first half.
This is according to the third quarter median forecasts from a Channel NewsAsia poll of 10 economists.
This comes ahead of the gross domestic product (GDP) flash estimates to be released by the Ministry of Trade and Industry (MTI) on Thursday.
With global growth starting to show signs of slowing, Singapore's leading indicators have also taken a knock.
The country's industrial output rose a modest 8.1 per cent on year in August, its slowest rate in 9 months while Singapore's purchasing managers index or PMI has also remained below the expansion level of 50 points for the second straight month in September.
Experts said this could mean year-on-year GDP growth will likely slow to 10.5 per cent, significantly slower than the country's first half growth of 18 per cent.
Experts say the expected decline in the biomedical sector may drag the economy to its biggest quarterly contraction since records began.
Alvin Liew, an economist with Standard Chartered Bank believes that the decline in the biomedical sector may drag the economy to its biggest quarterly contraction since records began.
"In the first half of the year, manufacturing had a phenomenal rebound, however, a large part of it is coming in from this surge in pharmaceuticals. Our expectation is that there will be a key drag coming in from manufacturing especially from biomedical," he said.
However, economists say that the stronger sector is likely to be in services, which is expected to expand moderately.
This is due to tourism remaining resilient, as well as financial services benefiting from stronger markets and a higher loan growth.
"[In the services sector], we did get a boost from the two integrated resorts that opened. If you look at the tourism numbers, they seem encouraging. I think there will be some lift from all the recent YOG, F1 and some of the other tourist events we've had over the last couple of months, so I think in terms of tourist related services, I think that should fare fairly well," said Selina Ling, Head of Treasury Research and Strategy with OCBC Bank.
The Monetary Authority of Singapore will also announce its 6-monthly policy review tomorrow.
Economists are not expecting any changes in the current policy of a modest and gradual appreciation of the Singapore dollar, which was implemented at the last meeting in April.
Observers say the central bank is taking a wait and see approach in the face of global economic uncertainty and rising capital inflows into Asia, which has caused regional currencies to rally in recent months.
Median from 10 economists:
Q/Q Seasonally Adjusted Annual Rate
-12.2, -14.9, -15.4, -15.5, -16.0, -16.6, -17.0, -18.0, -21.1, -29.9 = -16.3%
Y/Y
5.8, 9.0, 10.1, 10.4, 10.5, 10.5, 10.8, 10.9, 11.1, 12.0 = +10.5%
-CNA/ac
By Chris Howells | Posted: 13 October 2010 2215 hrs
SINGAPORE: Singapore's economy may have contracted by 16 per cent on-quarter, which would be the biggest fall on record. The manufacturing sector, led by pharmaceuticals has slowed, following the rapid growth of the first half.
This is according to the third quarter median forecasts from a Channel NewsAsia poll of 10 economists.
This comes ahead of the gross domestic product (GDP) flash estimates to be released by the Ministry of Trade and Industry (MTI) on Thursday.
With global growth starting to show signs of slowing, Singapore's leading indicators have also taken a knock.
The country's industrial output rose a modest 8.1 per cent on year in August, its slowest rate in 9 months while Singapore's purchasing managers index or PMI has also remained below the expansion level of 50 points for the second straight month in September.
Experts said this could mean year-on-year GDP growth will likely slow to 10.5 per cent, significantly slower than the country's first half growth of 18 per cent.
Experts say the expected decline in the biomedical sector may drag the economy to its biggest quarterly contraction since records began.
Alvin Liew, an economist with Standard Chartered Bank believes that the decline in the biomedical sector may drag the economy to its biggest quarterly contraction since records began.
"In the first half of the year, manufacturing had a phenomenal rebound, however, a large part of it is coming in from this surge in pharmaceuticals. Our expectation is that there will be a key drag coming in from manufacturing especially from biomedical," he said.
However, economists say that the stronger sector is likely to be in services, which is expected to expand moderately.
This is due to tourism remaining resilient, as well as financial services benefiting from stronger markets and a higher loan growth.
"[In the services sector], we did get a boost from the two integrated resorts that opened. If you look at the tourism numbers, they seem encouraging. I think there will be some lift from all the recent YOG, F1 and some of the other tourist events we've had over the last couple of months, so I think in terms of tourist related services, I think that should fare fairly well," said Selina Ling, Head of Treasury Research and Strategy with OCBC Bank.
The Monetary Authority of Singapore will also announce its 6-monthly policy review tomorrow.
Economists are not expecting any changes in the current policy of a modest and gradual appreciation of the Singapore dollar, which was implemented at the last meeting in April.
Observers say the central bank is taking a wait and see approach in the face of global economic uncertainty and rising capital inflows into Asia, which has caused regional currencies to rally in recent months.
Median from 10 economists:
Q/Q Seasonally Adjusted Annual Rate
-12.2, -14.9, -15.4, -15.5, -16.0, -16.6, -17.0, -18.0, -21.1, -29.9 = -16.3%
Y/Y
5.8, 9.0, 10.1, 10.4, 10.5, 10.5, 10.8, 10.9, 11.1, 12.0 = +10.5%
-CNA/ac
