There are emerging signs that the recession in Singapore is bottoming out following a 2.2 percent economic contraction last year, the government said yesterday.
The slump in gross domestic product (GDP) last year was largely due to a significant decline in manufacturing, the trade ministry said in a statement.
The export-oriented manufacturing sector is the engine-room of Singapore's trade-driven economy and was severely hurt by the global slump in demand for electronics.
But, while the city-state is in its worst-ever economic downturn, the 2.2 percent fall -- following 9.9 percent growth in 2000 -- was better than the government's most recent forecast of a 3.0 percent decline.
There is a glimmer of hope for the coming year, said the quasi-central bank, the Monetary Authority of Singapore (MAS).
"There are some signs the economy may be bottoming out," the MAS said in a statement.
In the fourth quarter, advance estimates show GDP shrank by 7.0 percent from the same period in 2000, following falls of 5.5 percent in the third quarter and 0.4 percent in the second.
But GDP increased at an annualized rate of 4.3 percent in the last three months on a quarter-on-quarter basis, after declining at a rate of 10 percent for the previous three quarters, the MAS said.
"Given the openness of the Singapore economy, our recovery hinges critically on the strength of the turnaround in the electronics industry and ... some tentative positive signs have emerged in recent weeks," MAS said.
"However, we remain cautious about whether this is the start of a sustainable improvement, or merely a year-end seasonal pick-up in demand."
Given the uncertainties, the government has not revised its forecast range for economic growth in 2002 of between a 2.0 percent contraction and a 2.0 percent expansion.
Analysts were also wary of endorsing signs of a turnaround.
"The improvement in GDP numbers for the fourth quarter of 2001 was mainly due to inventory correction. But we still don't know why re-stocking should take place as there are little sign of improvement in final demand," HSBC Securities senior regional economist Vasan Shridharan said.
"There are signs of stability in the global manufacturing sector, which will come in handy for the local manufacturing sector and its exports, but the question at the moment is, where will the final demand come from."
But Standard Chartered Bank economist Steve Brice said the fourth quarter data showed a marked improvement in economic performance.
"While the authorities still hold on to their minus-two to plus-two growth forecast, it is clear that they are becoming less concerned about the economic outlook," he said.
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