Singapore’s gross domestic product climbed by 3.5 per cent in the fourth quarter of 2009, but growth for the full year is still negative at minus 2.1 per cent.
In his New Year message, Singapore Prime Minister Lee Hsien Loong said that next year could see 3 to 5 per cent growth.
And observers believe this could result in a move away from manufacturing as the key driver of Singapore’s economy.
After a difficult start to 2009, Singapore’s economy has ended the year on a more cheerful note.
In his New Year message, Mr Lee said that the fourth quarter of 2009 saw GDP climb 3.5 per cent.
However, GDP growth for the full year still stands at minus 2.1 percent.
Current estimates put 2010’s GDP growth at between 3 and 5 per cent, and observers expect manufacturing to play an increasingly smaller role in the economy next year.
Alvin Liew, economist, Standard Chartered Bank, said: “If we look at current trends themselves, and what happens in developed economies in the West, this is clearly not a sustainable picture. To keep a manufacturing base that high… But at the same time, as we move towards a more developed stage in economic development, we are expecting services to play a bigger and bigger role as the economy develops.”
Financial services are among those expected to see the most growth next year, while tourism-linked industries are also likely to improve once Singapore’s two integrated resorts open.
But observers are waiting to see how the global economy unwinds current support packages as this could pose a risk to growth.
Selena Ling, head, Treasury Research & Strategy, OCBC Bank, said: “A lot of the private demand in key economies like the US, and certain parts of the eurozone, and in Japan in particular, it is really relying on government stimulus to keep consumption spending going.
“So once that tails off, you may also see final demand tailing also. That will have implications for manufacturing, especially exports for Asia, including Singapore.”
The private sector has welcomed the return the growth. But business leaders said companies would need to work hard to maintain that growth next year. That is because manpower issues could become a concern as the fast-growing services sector seeks to fill its ranks.
Source: Channel News Asia, 31 Dec 2009