Singapore's economy contracted for the first time in more than four years in the fourth quarter as weakness in the manufacturing sector outweighed windfall growth from a construction boom, the government said yesterday.
Singapore's economy shrank 3.2 percent from the third quarter on a seasonally adjusted annualized basis, the Ministry of Trade and Industry's advance estimate showed. It expanded 4.4 percent in the July-September quarter compared with the second.
A Dow Jones Newswires poll of economists had forecast a 4.2 percent rise in the final quarter of the year. The contraction marked the biggest decline since the 7.6 percent drop in the second quarter of 2003.
Singapore suffered from slower exports of drugs and electronics in the fourth quarter, and while services and construction remained healthy, manufacturers may be vulnerable to softer external demand this year.
Manufacturing output rose just 0.5 percent from a year earlier in the fourth quarter after growing 10.3 percent in the previous three months. The sector expanded 5.6 percent for the full year.
Construction output rose 24.4 percent compared with the same quarter a year ago, accelerating from 19.2 percent growth in the third quarter.
The services sector was also a key growth driver in the fourth quarter, led by financial institutions and a healthy tourism industry.
The services sector grew 8.3 percent year-on-year in the fourth quarter, matching the pace of the previous three months. For the full year, services expanded 8.1 percent.
Gross domestic product rose 6 percent from a year earlier, less than the 9 percent rise posted in the third quarter and coming in short of a poll forecast for 7.8 percent growth.
For the full year, Singapore's economy grew 7.5 percent, which was less than the 7.9 percent rise posted in 2006.
The downturn in the fourth quarter could cause a dilemma for the island's central bank as the risk of an economic slump precludes monetary tightening even as the island faces the highest inflation since the early 1980s.
Singapore's central bank uses foreign exchange rather than interest rates to control prices because external trade dwarfs the domestic economy.
Last October it said it would let the Singapore dollar appreciate at a faster pace to cap surging costs of imported food and energy.
The consumer price index -- a non-core measure of costs for goods and services -- rose 4.2 percent from a year earlier in November, the fastest pace since May 1982.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS