Tuesday, January 3, 2006
Singapore growth beats forecasts
John Burton / Singapore January 03, 2006
Economy expanded by 5.7% for the full year, says Prime Minister Lee Hsien Loong.
Singapore is expected to report on Tueday that its economy grew by 7.7 per cent in the fourth quarter from a year ago, exceeding forecasts by most economists.
The preliminary estimate for the October-December period is based on the disclosure by Lee Hsien Loong, the prime minister, in his New Year's message that the economy expanded by 5.7 per cent for the full year.
The unexpectedly strong performance reflects increased exports for the city-state's main industries, including electronics, pharmaceuticals and offshore rigs.
But some economists warn that in spite of the robust gross domestic product figures, growth has been unbalanced with sluggish domestic demand. Private consumption has risen only 2.3 per cent and investment contracted 4 per cent in the January-September period.
The government estimates that growth in 2006 will be 3-5 per cent, which is seen as conservative by economists.
The bouyant economy could persuade the government to hold an early general election, with an improvement in wages, jobs and consumer confidence likely to lead to increased consumer spending this year.
"Retail sales were brisk and the property market showed signs of improvement," while Singapore reported a record number of tourists at 9m, said Lee.
He suggested that a healthy budget surplus would allow the government to spend more on the disadvantaged, including the elderly and unskilled workers who have had problems finding jobs.
The overall unemployment rate, which includes foreign workers, has fallen to 3.3 per cent, although it is higher for local workers at 4.3 per cent.
Economists predict that Singapore will be able to maintain growth momentum during at least the first quarter of 2006 since global electronics demand is expected to be strong after weakening in the first half of 2005.
Singapore's role as the world's largest manufacturer of offshore rigs has benefited from high oil prices, with energy producers increasing exploration and exploitation of offshore oil fields.
But the export-dependent economy is still vulnerable to external factors since demand from the US and China is a main source of growth. Singapore's main trading partners could be affected by higher oil prices and interest rates this year.
Lee said Singapore's external trade grew by 14 per cent in 2005 due to a growing network of free trade agreements. -------------------------------------------------------- Top of the world
Unexpectedly strong performance reflects increased exports for the city-state's main industries, including electronics, pharmaceuticals and offshore rigs
Estimates for growth in 2006 are 3-5 per cent, which are seen as conservative by economists
Booming economy could persuade government to hold an early general election