Wednesday, January 4, 2012

Singapore's economic growth slows as manufacturing dips

Singapore's economic growth slowed in the last quarter of 2011 as reduced demand and supply chain disruptions hurt manufacturing.

The economy grew 3.6% between October and December, from a year earlier, down from 5.9% in the previous quarter.

For the full year, Singapore's economy grew by 4.8%, a sharp decline from a 14.5% expansion in 2010.

Prime Minister Lee Hsien Loong has warned that growth is likely to weaken further in 2012.

"The external environment is uncertain. Debt problems in Europe are far from solved. Next year looks like being difficult for the global economy," the prime minister said in his new year's message.

"As a small, open country, Singapore will inevitably be affected," he added.

On a quarter-on-quarter annualised basis, the economy contracted by 4.9% during the period, compared with a 1.5% gain in the previous quarter.

Manufacturing hurt

The manufacturing sector is one of the key drivers of growth of Singapore's economy.

However the sector has been hit hard by a combination of various factors in recent months.

Firstly, the debt crisis in the eurozone and a sluggish recovery in the US has seen a fall in demand from those key markets.

Secondly, the floods in Thailand in the latter half of 2011 disrupted supplies of components such as hard disk drives, hurting production at Singaporean factories.

Data released last month showed that industrial production fell by 9.6% in November from a year earlier, with electronics production down by 30.1%.

The Ministry of Trade and Industry said the decline was a big drag on economic growth.

"The moderation of growth in the fourth quarter was largely due to the slowdown in the manufacturing sector," it said in a statement.

Overall, the manufacturing sector grew by 6.5% in the the three months to the end to December from a year earlier, down from a 13.4% expansion in the previous quarter.

bbc.co.uk

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