Opening Remarks by PS Mrs Ow Foong Pheng for 3Q12 Economic Survey of Singapore
Good morning and welcome to MTI.
Details of Singapore’s economic performance for the third quarter and the growth outlook for 2012 and 2013 are contained in the press release. Let me highlight a few key points.
The Singapore economy contracted in the third quarter of 2012, compared to the preceding quarter, alongside sluggish global economic conditions.
- On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted by 5.9%. This was a reversal from the 0.5 per cent growth in the second quarter.
- The pull-back in quarter-on-quarter growth was largely due to the decline in electronics manufacturing and wholesale trade clusters.
- On a year-on-year basis, the economy grew marginally by 0.3 per cent, compared to 2.5 per cent in the preceding quarter. This brought overall year-on-year growth for the first three quarters of 2012 to 1.4 per cent.
For the rest of the year, we expect modest growth support from transport engineering cluster and the construction cluster. However, Singapore’s externally-oriented sectors, particularly electronics manufacturing, could continue to be affected by flagging external demand.
- Singapore’s manufacturing Purchasing Managers’ Index contracted for the fourth consecutive month since July alongside a decline in new export orders.
- Similarly, according to EDB’s latest Business Expectations Survey, manufacturing firms indicated that the outlook for the sector in the next two quarters are expected to worsen, particularly for firms in the electronics cluster.
In view of this, MTI expects the Singapore economy to grow by around 1.5% in 2012. Growth could come in slightly below 1.5 per cent, should the weakness in externally-oriented sectors continue into the final quarter of 2012.
For 2013, global macroeconomic conditions are expected to remain sluggish and uncertain.
- In the US, economic growth would hinge on the extent of fiscal tightening. According to the International Monetary Fund, the US economy is expected to grow at a moderate pace in 2013, if excessive fiscal tightening can be avoided. If excessive fiscal tightening takes place, the US Congressional Budget Office has assessed that the economy could sink into a recession.
- In the Eurozone, economic growth is expected to remain stagnant as ongoing fiscal consolidation and bank deleveraging continue to weigh on domestic demand.
- In Asia, growth could improve moderately, on the back of resilient domestic demand. However, external demand is expected to be muted amidst subdued growth prospects in the advanced economies.
Thus, our assessment for 2013 is predicated on a gradual fiscal contraction in the US, continued weakness in the Eurozone but not an outright crisis, and resilient domestic demand in Asia. Against this macroeconomic backdrop, the growth outlook for Singapore remains cautiously positive.
- Certain externally-oriented sectors such as electronics manufacturing and wholesale trade could continue to see weak growth.
- But the transport engineering cluster, Biomedical Services (BMS) as well as the construction sector could continue to provide modest growth support to the economy in 2013.
Taking into account all the above factors, Singapore’s economic growth in 2013 is expected to be between 1 to 3 per cent.
Together with my panel members, I would now take your questions.