Workers are suspended in a cradle hanging from a crane at a construction site for a bridge in Singapore.
Workers are suspended in a cradle hanging from a crane at a construction site for a bridge in Singapore. Close
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Photographer: Brent Lewin/Bloomberg
Workers are suspended in a cradle hanging from a crane at a construction site for a bridge in Singapore.
Singapore’s economy shrank for the
first time in five quarters after its manufacturing and services
industries weakened, a contraction that may be short-lived as
the global recovery strengthens.
Gross domestic product fell an annualized 2.7 percent in
the three months to Dec. 31 from the previous quarter, when it
expanded a revised 2.2 percent, the trade ministry said in a
statement today. The median of 11 estimates in a Bloomberg News
survey was for a 1.3 percent contraction.
Singapore’s economy could benefit this year from improving
demand in the U.S. and Europe, even as companies in the city-state grapple with rising costs and curbs on cheap foreign labor.
The island’s trade promotion agency said in November exports
will rebound in 2014 after contracting last year, easing
pressure on the central bank to allow the currency to weaken to
support overseas shipments.
“The global recovery is still definitely intact,” said
Joey Chew, a Singapore-based economist at Barclays Plc. “2014
looks like it’s going to be much stronger than 2013 for the
global economy so this will definitely support Singapore.”
The Singapore dollar was little changed against its U.S.
counterpart at S$1.2642 as of 11:12 a.m. local time. The
currency weakened more than 3 percent last year even as the
central bank said it would maintain an appreciating stance to
curb inflation pressures. The depreciation was the biggest
annually since 2001, according to data compiled by Bloomberg.
Global Stabilization
The economy expanded 3.7 percent in 2013, accelerating from
a 1.3 percent pace the previous year. Prime Minister Lee Hsien Loong on Dec. 31 reiterated a forecast for growth of 2 percent
to 4 percent in 2014.
“The European and American economies are stabilizing,”
Lee said in his New Year message. “Asian prospects are still
positive, but there are problems and tensions,” he said, citing
disputes between China, Japan and South Korea over historical
issues and the ownership of various islands.
GDP grew 4.4 percent in the three months through December
from a year earlier, compared with a median survey estimate of
4.8 percent.
Emerging Asian economies will probably weather the impact
of reduced U.S. monetary stimulus, Asian Development Bank
President Takehiko Nakao said in an interview on Dec. 26,
predicting growth of about 6 percent in 2014.
“External demand will be improving,” Glenn Maguire, a
Singapore-based economist at Australia New Zealand Banking
Group Ltd., said before the report. “That we can have the U.S.,
Japan and Europe all expanding and growing positively in 2014
suggests that Asia, not just Singapore, should be seeing a
fairly firm production and export outlook.”
China Manufacturing
While developed markets recover, a group representing
Japan’s auto manufacturers said a slowdown in emerging nations
will extend into this year, compounding uncertainty over demand
in China and at home. Chinese manufacturing growth weakened in
December, according to gauges of output released this week.
The Monetary Authority of Singapore, which uses the
island’s dollar to manage inflation, said in October it will
maintain a modest and gradual appreciation of the currency. It
resisted providing stimulus as labor shortages and record home
prices fueled consumer price gains. The central bank forecasts
inflation to be 2 percent to 3 percent in 2014.
“The MAS will not do much to facilitate growth, it will
rather err on the side of price stability,” said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd.
However, “there’s no compelling need for them to tighten just
yet,” he said.
Construction Slowdown
Manufacturing fell 4 percent last quarter from the previous
three months, the trade ministry said. The services industry
shrank 1.7 percent in the same period, while construction
contracted 6.9 percent.
The slowdown in construction was a result of a moderation
in private-sector building activities, the trade ministry said.
Singapore’s fourth-quarter home prices slid for the first time
in nearly two years, data released today showed. The decline
trimmed annual price gains to the smallest since 2008 as
mortgage curbs cooled demand in Asia’s second-most expensive
housing market.
The GDP figures released today were computed largely from
data for October and November and may be revised.
To contact the reporter on this story:
Sharon Chen in Singapore at
schen462@bloomberg.net
To contact the editor responsible for this story:
Stephanie Phang at
sphang@bloomberg.net
Singapore GDP Contracted Last Quarter as Output Eased: Economy
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