Singapore’s economy grew 4.9 percent last year, higher than earlier estimates as a surge in fourth-quarter pharmaceutical exports cushioned a drop in electronics, the government said yesterday.
However, Singapore kept its growth forecast for this year at a weaker 1 to 3 percent, citing falling demand from key exports markets in debt-plagued Europe and a sluggish recovery in the US.
The city-state’s trade-oriented economy is considered a bellwether for Asia’s exporters, which depend heavily on electronics and other manufactured shipments to the West as economic drivers.
The annual growth of 4.9 percent slightly outpaced preliminary estimates last month of a 4.8 percent expansion.
Last month’s advance estimates had indicated a 4.9 percent quarter-on-quarter drop in the final three months of last year. However, Singapore’s GDP instead fell 2.5 percent in the October-December period compared with the previous three months on a seasonally adjusted annualized basis, the trade ministry said.
For this year, the government said its growth forecast could still be affected by “downside risks” overseas.
“This does not factor in downside risks emanating from abroad. Specifically, a disorderly sovereign default in the eurozone could precipitate a global financial crisis, while an escalation of geopolitical tension in the Middle East could trigger a global oil price shock,” the trade ministry said.
“Should any of the downside risks materialize, there could be further negative impact to Singapore’s growth,” it added.
DBS Group Research said the less severe fourth-quarter contraction was the result of a spike in the volatile bio-medical sector.
“The boost from the pharmaceutical segment has masked the downside risks facing the manufacturing sector,” it said in a note.
Singapore’s manufacturing sector grew 9.2 percent year-on-year in the fourth quarter, with the biomedical cluster surging 69 percent thanks to pharmaceuticals, according to the trade ministry.
However, electronics manufacturing posted a 25 percent contraction because of weak export demand and supply-chain disruptions following the massive floods in Thailand, a key producer of electronic parts.
Other manufacturing clusters such as chemicals and precision engineering also posted falls.
In 2010, Singapore’s GDP grew 14.5 percent, which was considered a freak number because the economy was bouncing off a recession.