MTI expects Singapore economy to grow by around 1.5% in 2012

The Ministry of Trade and Industry (MTI) announced today that it expects the Singapore economy to grow by around 1.5% in 2012 and by 1.0 to 3.0% in 2013.

Preliminary estimates show that the Singapore economy grew by 0.3% on a year-on-year basis in the third quarter of 2012, following the 2.5% increase in the preceding quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted by 5.9%, after growing by 0.5% in the previous quarter.

The pullback in quarter-on-quarter growth momentum was largely due to the decline in externally-oriented sectors such as manufacturing and wholesale trade. On a quarter-on-quarter seasonally-adjusted annualised basis, the manufacturing sector contracted by 9.6%, following flat growth in the preceding quarter. This was largely due to contraction in the electronics manufacturing cluster. On a year-on-year basis, the manufacturing sector declined by 0.8%, compared to the 4.6% expansion in the previous quarter.

Singapore’s economic growth is expected to remain subdued for the rest of 2012. The electronics manufacturing cluster would continue to be weighed down by tepid external demand. On the other hand, expansion in the construction sector could provide modest growth support to the overall economy. Taking these factors into consideration, MTI expects the Singapore economy to grow by around 1.5% in 2012. Growth may be slightly lower than forecast, if the weakness in the externally-oriented sectors persists into the final quarter of 2012.

MTI also expects Singapore’s economic growth to be between 1.0 to 3.0% in 2013. However, the global economic outlook is still clouded with uncertainties. In particular, there remain concerns over the extent of the fiscal cutback in the US and potential escalation of the ongoing debt crisis in the Eurozone. Should any of these risks materialise, Singapore’s economic growth could come in lower than expected.