The Singapore government says while the growth forecast of the country’s economy for the whole year hiked up aggressively after resurging for two quarters, the outlook for 2010 is a bit more subdued.
According to the Monetary Authority of Singapore (MAS), though the global recession could possibly have ended, it is expected that the growth of gross domestic product (GDP) in 2010 could be slower than in the past post-recession periods.
The advance estimates of the GDP growth during the third-quarter show a year-on-year rebound of 0.8 percent, which is viewed as the first to have a positive number following the three negative quarters. Also, the on-quarter consecutive growth of 14.9 percent is in line with the market expectations. Meanwhile, the figures during the second quarter are also revised upward.
After revising its official 2009 forecast to 2-2.5 percent contraction, the Ministry of Trade and Industry (MTI) stated yesterday that the continued growth of electronics and biomedical output as well as the improvements in the tourism and trade-related sectors had spurred growth. Previously, it forecasted a 4-6 percent contraction.
MAS – which maintained its neutral standing on the Singapore dollar after keeping its monetary policy yesterday unchanged – stated that it is not expected for the economy to sustain the tough pace of the second and third quarter, especially with the fundamental export markets that are yet to decisively recover.
MAS says the economy of Singapore is “likely to settle at a more gradual pace of expansion” as the global backdrop is still uncertain.
Meanwhile, MTI also reckons that the economic activity in the country will possibly remain below the levels of pre-crisis, and the growth in the coming 2010 could be dampened and become uneven.
MTI says that while “one-off factors such as restocking activities and fiscal stimulus measures will continue to support growth in the near term”, a maintained pick-up in investment and private spending in the developed country is essential to support the growth momentum up to the 2010’s second half.
However, without further financial shocks, the risk of returning to recessionary situations is low, MTI adds.
Some economists in the private sector, in which lately most of them are highly optimistic, seemed to rub off the official remarks’ cautious tone.
Still, others await the flash of the GDP figures on the third quarter – which are only based on the data from July to August – to be modified in due time.
While Barclays Capital decides to take the cue to raise its forecast for full-year from the third quarter’s figures, United Overseas Bank (UOB) also keeps its minus 3.3 percent projection; though, “there could be an upside bias”.
Economists of UOB believe that the sector of manufacturing, which is mostly driven by the unstable pharmaceuticals as well as by the electronics cluster that hasn’t recovered, “could see some downward pressure in Q4”.
Also, they note that the said official forecast proposes, at best, a chronological contraction of about one percent in the fourth quarter.
Rajeev Malik of Macquarie Securities says he is keeping his GDP forecast in 2010 of 5 percent growth.
“The one-off sizeable positive impact of restocking will not be repeated next year and the economy will have to rely more on the below-trend improvement in final demand in the industrialised economies”, he said.
Morgan Stanley’s economists, expecting a 4 percent growth next year, also believe that the recovery will become uneven.