Economy dives from 5.2% growth in 2011 to 1.3% last year 2012

The Ministry of Trade and Industry (MTI) announced today (22 Feb) that the Singapore economy grew by 1.3% in 2012.

For the 4th quarter in 2012, the Singapore economy grew by 1.5% on a year-on-year basis.

For the whole of 2012, Singapore’s GDP growth slowed to 1.3 per cent, from 5.2 per cent in 2011, mainly due to weakness in the externally-oriented sectors. The breakdown is as follows:

2012

1. Manufacturing 0.1% (previous year was 7.8% – electonics industry contracted)

2. Construction 8.2% (previous year was 6.3% – public and private building activities increased)

3. Service 1.2%
a. Business services sector 3.9% (strong performance in the real estate segment)
b. Wholesale & retail trade sector -0.7%
c. Finance & insurance sector 0.5%
d. Others 0.1%

Economic Outlook for 2013

The global macroeconomic conditions have stabilised in recent months against the backdrop of improved financial market conditions. Nevertheless, global economic growth is likely to remain subdued. In the US, while the housing market has shown signs of improvement, the strength of the economic recovery will be restrained by fiscal tightening. In the Eurozone, economic growth is expected to remain stagnant, weighed down by ongoing fiscal tightening, private sector deleveraging, as well as high unemployment rates.

In Asia, growth is likely to be moderate, supported by resilient domestic demand and modest growth in external demand. Against this macroeconomic backdrop, the outlook for the Singapore economy remains cautiously positive. MTI is maintaining its 2013 economic growth forecast at 1.0 to 3.0%.

While downside risks have receded, the global economic outlook is still clouded with uncertainties. In particular, concerns remain over the extent of the fiscal cutback with the budget sequester in the US, as well as the potential flare-up of the debt crisis in the Eurozone. Should any of these risks materialise, Singapore’s economic growth could come in lower than expected.