Private economists are even more upbeat, tipping growth of up to 6.5 per cent.
The country also decisively bid farewell to its deepest recession since Independence, with the Ministry of Trade and Industry (MTI) announcing that the economy expanded 0.6per cent in the third quarter from the same period a year earlier.
‘Effectively, the recession is over,’ MTI permanent secretary Ravi Menon said at a briefing. ‘Economies around the the world are now turning the corner… Asia is leading the global recovery… Singapore has benefited from these global and regional trends.’
Although the June to September figure was below the initial 0.8 per cent estimate, it marked the first time the economy has expanded in year-on-year terms since the third quarter of last year.
It was also the second straight quarter of expansion when compared to the preceding quarter – with this number coming in at a vigorous 14.2 per cent over the March to June period.
As in the second quarter, growth was led by manufacturing, especially in the biomedical sector, which surged 9 per cent after posting strong 21 per cent quarter-on-quarter second-quarter growth.
However, a broader rebound was also seen in the vast services sector, which grew 10.8 per cent relative to the previous three months and shrank just 2.2 per cent year-on-year.
MTI said it is keeping its 2009 full-year economic forecast of a contraction of 2.5 to 2 per cent.
This means a possible blip in the fourth quarter, which might shrink compared to the third quarter, owing to potentially weaker output from the drugs sector and less aggressive goods restocking.
Commenting on the figures at a labour event, Minister in the Prime Minister’s Office and Second Minister for Finance and Transport Lim Hwee Hua said: ‘There are clearly bright spots ahead for us to look forward to, but the landscape has changed and so all of us should stay vigilant. But we have what it takes to meet the challenges head-on.’
MTI does not expect the recovery to be smooth sailing or for growth to rebound to pre-crisis levels.
However, it notes that certain sectors will excel. For instance, the opening of the integrated resorts next year should boost tourism, while chemical and biomedical manufacturing will get a lift from new plants coming onstream.
Mr Menon said: ‘While we can expect fairly strong growth in the first half, the outlook for the second half is more uncertain. But we do not expect a return to recessionary conditions in the second half.’
He said MTI’s 2010 forecast reflects a significant degree of caution as it has adopted a conservative outlook for the world’s largest economy, the US.
Upside surprises to its prediction could come if the US jobs situation improves significantly or if key economies roll out more stimulus measures.
Risks include a double-dip US recession brought on by another financial sector shock or worsening US jobless figures dragging down private spending further.
Private sector economists were generally more bullish about Singapore’s 2010 growth prospects. Most of them expect growth of between 4 per cent and 6.5 per cent.
‘We expect the Government to revise up next year’s growth projections significantly over time,’ said HSBC economist Robert Prior-Wandesforde, who is tipping the economy will grow 6.5 per cent next year.
OCBC economist Selena Ling, who expects 4 per cent growth next year, said: ‘The proof of the pudding remains in the second half of 2010, when the fiscal stimulus and restocking exercises are largely over, leaving private demand and investment to step up to the plate.’
The Government also revised its 2010 inflation forecast upwards – from 1 per cent to 2 per cent to 2.5 per cent to 3.5 per cent. This is due to the recent revision in annual values of HDB properties announced by the Inland Revenue Authority of Singapore.
Its 2009 inflation forecast remains at zero per cent.
Total trade is expected to grow between 7 per cent and 9 per cent next year, thanks to higher projected oil prices and a likely recovery in global demand.
Source: Straits Times, 20 Nov 2009
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