Opening Remarks by PS Mrs Ow Foong Pheng for Economic Survey of Singapore (2012) on 22 February 2013
Good morning and welcome to MTI.
Details on Singapore’s economic performance for 2012 and the growth outlook for 2013 are contained in the press release. Let me highlight a few key points.
Singapore’s GDP grew by 1.3 per cent in 2012, slightly better than what was estimated last month. GDP growth for 2011 was also revised upwards, to 5.2 per cent.
- The slowdown in 2012 GDP growth was largely due to the challenging external conditions, which saw the global economy growing at its slowest pace in 3 years.
- Key externally-oriented sectors such as electronics and wholesale and retail trade contracted, on the back of weak external demand and slower global trade flows.
- But our biomedical manufacturing and transport engineering clusters, as well as domestically-oriented sectors such as construction and business services, provided some support to growth in 2012.
- quarter-on-quarter growth momentum also picked up in the last quarter of 2012, reversing the decline seen in the third quarter. Both manufacturing and services saw positive quarter-on-quarter growth, and the economy ended the year on a firmer footing.
While key downside risks have receded since the introduction of the Outright Monetary Transactions and the partial resolution of the US fiscal cliff, we still expect 2013 growth to remain subdued.
- In the US, economic growth is expected to be modest. While improvements in the labour and housing markets could provide growth support, the onset of fiscal cutbacks will dampen consumer spending and the strength of economic recovery. The strength of the economic recovery would hinge on the outcome of budget sequester which will be decided on 1st March 2013.
- In the Eurozone, while financial market conditions have improved, the economy is likely to remain stagnant. Ongoing fiscal tightening, private sector deleveraging, as well as high unemployment rates, will continue to weigh on growth. The economic situation remains fragile and prone to potential flare-up of the debt crisis.
- Growth in Asia is expected to be moderate, supported by resilient domestic demand and modest growth in external demand. However, it cannot completely offset the weaknesses in advanced economies.
Our assessment for Singapore’s growth outlook in 2013 is based on modest fiscal cutbacks in the US and no outright crisis in the Eurozone. Against this macroeconomic backdrop, the growth outlook for Singapore remains cautiously positive.
- Singapore’s manufacturing Purchasing Managers’ Index (PMI) expanded for the first time in January 2013, after 6 months of consecutive contraction. However, the electronics PMI remains in the contractionary zone, despite the uptick in January.
- Continued expansion in the transport engineering cluster as well as domestically-oriented sectors such as business services could provide growth support to the economy.
In view of the above factors, MTI is maintaining the 2013 growth forecast at between 1 to 3 per cent.
I will now take your questions.