03-01-2013, 10:51 AM
Let's face it - even with a technical recession, people will still be gainfully employed and everyone will still be snapping up properties. So what difference does it make? It's just a statistic.
The Straits Times
www.straitstimes.com
Published on Jan 03, 2013
Singapore avoids recession as Q4 sees 1.8% growth
Downward revision of growth rates in previous quarters was a key factor
By aaron low assistant money editor
SINGAPORE has dodged a recession after the economy managed to grow in the final three months of the year.
Fourth-quarter growth came in at 1.8 per cent compared with the three months before, surprising many economists who were expecting a contraction.
This easily trumped the 6.3 per cent contraction in the third quarter, flash data based on October and November from the Trade and Industry Ministry showed.
But the better showing is not directly the result of a stronger economy.
OCBC economist Selena Ling said Singapore managed to avoid a technical recession - defined as two consecutive quarters of declines - largely because the growth numbers were revised down in previous quarters.
As a result, the fourth quarter numbers looked better by comparison, she said.
"The Government also expects slightly better-than-expected manufacturing performance in December, which may have pushed up the estimates," she said.
Singapore is not out of the woods just yet, said economists.
They point to the major uncertainties in the United States over spending cuts and near-recession conditions in Europe. The US and Europe are two of the biggest markets for Singapore's exports.
HSBC economist Leif Eskesen said that while there has been a recovery, "overall, there has not been too much to cheer about".
"The economy remains very much at the whim of the global economy, which is still struggling, notwithstanding indications that the US may step back from its self-imposed fiscal cliff," he said.
In a year-on-year comparison, the fourth quarter grew 1.1 per cent, rounding out the year's growth at 1.2 per cent - below the Government's previous forecast of "about 1.5 per cent".
The big winner this year was the construction sector. It grew 8.8 per cent compared with last year, driven by a strong pipeline of public infrastructure projects from highways to train lines.
Services also managed to grow in 2012 but by a feeble 1.2 per cent, hit by bouts of volatility and uncertainty in global markets.
But it was manufacturing which bore the brunt of the weak global economy, contracting 0.2 per cent overall, dragged down by a poor electronics showing.
The economy is expected to grow at a sluggish pace of between 1 per cent and 3 per cent this year, a rate that many analysts say could be the norm for years to come. Citigroup economist Kit Wei Zheng said that even if manufacturing rebounds in the first few months of this year, "until external uncertainties subside, sustainability of any rebound would remain questionable".
A key issue Singapore faces this year is whether it can raise its productivity.
Acting Manpower Minister Tan Chuan-Jin noted recently that employment growth has been slower than GDP growth, implying "that with every additional worker employed, our economy became less productive on average".
The weak productivity growth in turn could affect inflation.
Said United Overseas Bank economist Francis Tan: "Domestic risks to growth this year will come in the form of higher production costs coming from the tight labour market, an appreciating Singapore dollar, climbing industrial property prices and rising oil prices."
Inflation is forecast to be between 3.5 per cent and 4.5 per cent this year.
aaronl@sph.com.sg
The Straits Times
www.straitstimes.com
Published on Jan 03, 2013
Singapore avoids recession as Q4 sees 1.8% growth
Downward revision of growth rates in previous quarters was a key factor
By aaron low assistant money editor
SINGAPORE has dodged a recession after the economy managed to grow in the final three months of the year.
Fourth-quarter growth came in at 1.8 per cent compared with the three months before, surprising many economists who were expecting a contraction.
This easily trumped the 6.3 per cent contraction in the third quarter, flash data based on October and November from the Trade and Industry Ministry showed.
But the better showing is not directly the result of a stronger economy.
OCBC economist Selena Ling said Singapore managed to avoid a technical recession - defined as two consecutive quarters of declines - largely because the growth numbers were revised down in previous quarters.
As a result, the fourth quarter numbers looked better by comparison, she said.
"The Government also expects slightly better-than-expected manufacturing performance in December, which may have pushed up the estimates," she said.
Singapore is not out of the woods just yet, said economists.
They point to the major uncertainties in the United States over spending cuts and near-recession conditions in Europe. The US and Europe are two of the biggest markets for Singapore's exports.
HSBC economist Leif Eskesen said that while there has been a recovery, "overall, there has not been too much to cheer about".
"The economy remains very much at the whim of the global economy, which is still struggling, notwithstanding indications that the US may step back from its self-imposed fiscal cliff," he said.
In a year-on-year comparison, the fourth quarter grew 1.1 per cent, rounding out the year's growth at 1.2 per cent - below the Government's previous forecast of "about 1.5 per cent".
The big winner this year was the construction sector. It grew 8.8 per cent compared with last year, driven by a strong pipeline of public infrastructure projects from highways to train lines.
Services also managed to grow in 2012 but by a feeble 1.2 per cent, hit by bouts of volatility and uncertainty in global markets.
But it was manufacturing which bore the brunt of the weak global economy, contracting 0.2 per cent overall, dragged down by a poor electronics showing.
The economy is expected to grow at a sluggish pace of between 1 per cent and 3 per cent this year, a rate that many analysts say could be the norm for years to come. Citigroup economist Kit Wei Zheng said that even if manufacturing rebounds in the first few months of this year, "until external uncertainties subside, sustainability of any rebound would remain questionable".
A key issue Singapore faces this year is whether it can raise its productivity.
Acting Manpower Minister Tan Chuan-Jin noted recently that employment growth has been slower than GDP growth, implying "that with every additional worker employed, our economy became less productive on average".
The weak productivity growth in turn could affect inflation.
Said United Overseas Bank economist Francis Tan: "Domestic risks to growth this year will come in the form of higher production costs coming from the tight labour market, an appreciating Singapore dollar, climbing industrial property prices and rising oil prices."
Inflation is forecast to be between 3.5 per cent and 4.5 per cent this year.
aaronl@sph.com.sg