SINGAPORE - Singapore's economy shrank by 1.5
percent in the third quarter but avoided a technical recession
after growth in the previous three months was adjusted up,
government figures showed Friday.
The Ministry of Trade and Industry (MTI) said the
export-driven city-state was still on track to achieve annual
growth of 1.5-2.5 percent in 2012.
"Economic growth in the second quarter was better
than expected, resulting in an upward revision of
quarter-on-quarter annualised growth from the preliminary estimates
of minus 0.7 per cent to (plus) 0.2 per cent," it said.
The revision was thanks to new data showing stronger growth in both
industrial and residential buildings, it added.
Construction expanded 14.3 percent in the June quarter instead of
0.9 percent as earlier estimated.
Two successive quarters of negative growth are regarded as a
technical recession. Singapore is seen as a bellwether for Asia's
leading economies because of its sensitivity to world trade.
"Technically, we averted a recession," Song Seng Wun, a regional
economist with CIMB Research, told AFP.
The weak performance in the third quarter was largely due to a
contraction in the manufacturing sector, a key pillar of the
Singapore economy, as global demand for electronics goods
declined.
"For the rest of the year, growth could be weighed down by the
subdued global economic conditions," said MTI.
"Externally oriented sectors such as manufacturing and wholesale
trade will be affected by the slowdown in advanced
economies."
Construction and transport engineering however are expected to be
healthy, it added.
In a separate statement, the Monetary Authority of Singapore (MAS)
maintained its policy of keeping a stronger local currency in a bid
to contain inflation amid price pressures from a tight labour
market.
The MAS said there was no change to the slope and width of its
policy band for the Singapore dollar as well as the level at which
it is centred.
It said that while Singapore's export-oriented sectors bore the
brunt of the downturn, construction and financial services were
resilient.
"While there remains considerable uncertainty over the evolving
fiscal situation in the US and eurozone, recent central bank policy
initiatives worldwide have reduced the risk of a severe global
recession," MAS said.
- AFP/ir