THE key manufacturing and services sectors are still optimistic about the months ahead but more bosses are bracing themselves for slower growth.
Two surveys out yesterday point to a change in the economic climate, which could bring slower growth and a cut-back on hiring.
An Economic Development Board (EDB) poll showed that a weighted 25 per cent of manufacturers expect business conditions to improve over the next six months, down from 34 per cent in the April survey. And a weighted 7 per cent of companies felt things would get worse in the second half, up from 5 per cent three months ago.
About 376 manufacturers were surveyed between May and June.
Within manufacturing, firms in the electronics sector which have seen a huge uptick in fortunes over the past six months remained the most positive.
A weighted 43 per cent said things will get better, and another 45 per cent expect to increase production for the third quarter, with more export orders coming for Christmas.
'The firms foresee orders being sustained by demand for consumer electronic products such as wireless handsets and mobile computing devices,' said the EDB.
But only 7 per cent of manufacturers expect to hire workers over the next six months compared with 10 per cent three months ago.
Hiring is expected mainly in the electronics and precision engineering sectors.
OCBC economist Selena Ling said: 'We are seeing a more cautious tone. Certain sectors will be looking at a more modest pace of growth.
'Manufacturing is not going to be the main job creator going ahead, services is going to be, and we are really talking about the financial and tourism sectors in particular.'
A Department of Statistics survey of about 1,400 firms in the services sector found that a weighted 39 per cent of firms expect a more positive outlook, down from 45 per cent three months ago.
More firms also felt that things would stay the same, while slightly fewer firms said things would get worse.
The opening of the two integrated resorts and the upcoming Youth Olympic Games (YOG) and Formula One (F1) race appear to have given the services sector a boost in prospects.
The most positive were those in amusement and recreation - a new industry category that first appeared in the April survey.
A weighted 67 per cent in this segment expect a brighter second half, up from 34 per cent three months ago, while 51 per cent of hotels and caterers also expect things to get better, up from 48 per cent in April.
A weighted 40 per cent of companies in the information and communications sector also believe things will improve, compared with just 11 per cent in April.
Hoteliers also expect a rise in occupancy and the hiring of more people for the next three months for the F1 and YOG.
In April, 70 per cent of banks, fund managers and insurers felt things would get better but this has fallen to 41 per cent, with 4 per cent expecting worse conditions. Three months ago, no one expressed such pessimism.
But firms in the financial sector are the most bullish about hiring, with 46 per cent expecting to increase employment, a reflection that fund flows are still coming into Asia and Singapore, said Ms Ling.
Source: Straits Times, 31 Jul 2010
Showing posts with label Singapore Economy. Show all posts
Showing posts with label Singapore Economy. Show all posts
Saturday, July 31, 2010
Service sector powers S'pore's job growth
Pace of creation slows to 26,500 jobs but Manpower Minister remains upbeat
THE Singapore economy continues to enjoy strong employment growth, adding 26,500 jobs in the second quarter.
The fuel for growth came overwhelmingly from the service sector, thanks to the two integrated resorts, new hotels and heartland shopping malls.
Although the pace of job creation has slowed from the first quarter, when 36,500 jobs were added, Manpower Minister Gan Kim Yong is upbeat about the outlook for the rest of the year.
'Looking ahead, unemployment appears to have broadly stabilised and the labour market outlook for 2010 is optimistic, with robust employment growth expected,' he wrote in a posting on his ministry's newly set up blog.
The overall, seasonally adjusted unemployment rate was 2.3 per cent last month, up slightly from that in March but significantly lower than the rate of 3.2 per cent a year ago.
The resident unemployment rate - among Singaporeans and permanent residents - was 3.3 per cent last month, with an estimated 87,800 residents without jobs.
Redundancies also fell across the manufacturing, construction and service sectors, from a total of 2,400 in the first quarter to 1,900 in the second quarter.
Mr Gan described the fall as 'reassuring'.
The slowdown in job creation in the second quarter as compared with the first quarter could be due more to 'tight supply, rather than soft demand', Citigroup economist Kit Wei Zheng said.
Hiring difficulties could stem from more picky job seekers and a slower inflow of foreign workers, as compared with previous years, he added.
In terms of job growth, the service sector created 27,400 jobs in the second quarter. Construction added some 1,800 jobs, while manufacturing actually lost 2,400 jobs.
Economists believe job losses in manufacturing should not be a big source of concern, given the recent strong output growth. The losses were more likely due to the ongoing restructuring of the economy, said National University of Singapore economist Shandre Thangavelu.
'It will be very interesting to see third-quarter figures, whether employers will adjust slowly or immediately to the end of Jobs Credit,' he added.
He was referring to the $4.5 billion government scheme to subsidise local worker payrolls and encourage employers not to lay off workers during the recession. The scheme ended last month.
Looking ahead, the war for talent is likely to heat up as employee turnover is increasing, said Ms Yvonne Cox, South-east Asia managing director of human resource consultancy Towers Watson.
'The service sector, in particular the hospitality and retail industries, is experiencing spikes in employee turnovers as the integrated resorts have ramped up in the last six months,' she said.
Service-sector firms are upbeat about business conditions in the second half of this year, according to a Department of Statistics survey on third-quarter business expectations released yesterday.
Among those hoping to grow their business is coffee-shop chain Ya Kun Kaya Toast, which plans to open five outlets in November. The tight labour market, however, presents problems.
Its operations manager Jimmy Ng said it faces difficulties hiring young Singaporeans and a cap on hiring foreigners.'It's a good time to expand the business now but, without staff, we cannot open new outlets,' he said.
Mr Gan addressed the issue in his ministry's blog.
As productivity gains will take some time to materialise, employers 'may need to bring in additional foreign workers this year, despite the higher levy which took effect this month', he wrote.
But he also called on employers to step up efforts to raise productivity to meet the pace of growth, innovate and 'reduce their dependence on foreign manpower'.
Source: Straits Times, 31 Jul 2010
THE Singapore economy continues to enjoy strong employment growth, adding 26,500 jobs in the second quarter.
The fuel for growth came overwhelmingly from the service sector, thanks to the two integrated resorts, new hotels and heartland shopping malls.
Although the pace of job creation has slowed from the first quarter, when 36,500 jobs were added, Manpower Minister Gan Kim Yong is upbeat about the outlook for the rest of the year.
'Looking ahead, unemployment appears to have broadly stabilised and the labour market outlook for 2010 is optimistic, with robust employment growth expected,' he wrote in a posting on his ministry's newly set up blog.
The overall, seasonally adjusted unemployment rate was 2.3 per cent last month, up slightly from that in March but significantly lower than the rate of 3.2 per cent a year ago.
The resident unemployment rate - among Singaporeans and permanent residents - was 3.3 per cent last month, with an estimated 87,800 residents without jobs.
Redundancies also fell across the manufacturing, construction and service sectors, from a total of 2,400 in the first quarter to 1,900 in the second quarter.
Mr Gan described the fall as 'reassuring'.
The slowdown in job creation in the second quarter as compared with the first quarter could be due more to 'tight supply, rather than soft demand', Citigroup economist Kit Wei Zheng said.
Hiring difficulties could stem from more picky job seekers and a slower inflow of foreign workers, as compared with previous years, he added.
In terms of job growth, the service sector created 27,400 jobs in the second quarter. Construction added some 1,800 jobs, while manufacturing actually lost 2,400 jobs.
Economists believe job losses in manufacturing should not be a big source of concern, given the recent strong output growth. The losses were more likely due to the ongoing restructuring of the economy, said National University of Singapore economist Shandre Thangavelu.
'It will be very interesting to see third-quarter figures, whether employers will adjust slowly or immediately to the end of Jobs Credit,' he added.
He was referring to the $4.5 billion government scheme to subsidise local worker payrolls and encourage employers not to lay off workers during the recession. The scheme ended last month.
Looking ahead, the war for talent is likely to heat up as employee turnover is increasing, said Ms Yvonne Cox, South-east Asia managing director of human resource consultancy Towers Watson.
'The service sector, in particular the hospitality and retail industries, is experiencing spikes in employee turnovers as the integrated resorts have ramped up in the last six months,' she said.
Service-sector firms are upbeat about business conditions in the second half of this year, according to a Department of Statistics survey on third-quarter business expectations released yesterday.
Among those hoping to grow their business is coffee-shop chain Ya Kun Kaya Toast, which plans to open five outlets in November. The tight labour market, however, presents problems.
Its operations manager Jimmy Ng said it faces difficulties hiring young Singaporeans and a cap on hiring foreigners.'It's a good time to expand the business now but, without staff, we cannot open new outlets,' he said.
Mr Gan addressed the issue in his ministry's blog.
As productivity gains will take some time to materialise, employers 'may need to bring in additional foreign workers this year, despite the higher levy which took effect this month', he wrote.
But he also called on employers to step up efforts to raise productivity to meet the pace of growth, innovate and 'reduce their dependence on foreign manpower'.
Source: Straits Times, 31 Jul 2010
Thursday, July 29, 2010
Most firms less bullish about Q3 growth: Poll
THE threat of a fallout from the euro zone debt crisis has dented the confidence of some local firms, but most remain optimistic going into the third quarter, according to a new survey.
Bosses polled by credit rating firm D&B Singapore were largely positive and expect increases in profits, sales and new orders over the next three months.
D&B said the optimism was mainly down to the strong performance of key sectors here, with construction, services and manufacturing leading the way.
Ms Audrey Chia, a D&B senior director, also singled out the biomedical and electronics sectors as star performers, as the global recovery continues.
'A positive business outlook was observed across the board (for the third quarter) with the overall optimism index for both net profit and employment maintaining in the positive region,' she said.
'Nevertheless, the anxiety from Europe's sovereign debt crisis and the global financial fragility are starting to take their toll on overall business confidence with reported figures appearing less robust than in the previous quarter.'
Although less optimistic, most of the 200 companies polled by D&B still had high hopes for the third quarter.
The survey was to compile the Business Optimism Index (BOI), which compares the net percentages of the respondents' expectations in areas such as sales, profits and hiring activities with those in the previous quarter. A positive reading indicates optimism, a zero reading signals no change, while a negative one means the respondent expects a drop in performance.
'The majority of companies surveyed have indicated continued optimism towards their third-quarter performance for sales volume, net profit, selling price, employment and inventory,' said Ms Chia. 'Although overall sentiment is less bullish than in the second quarter.'
Compared with second-quarter figures, the third-quarter index for net profit dipped from 45 per cent to 26 per cent, sales volume from 41 per cent to 29 per cent, and new orders from 42 per cent to 35 per cent.
The BOI for employment also dipped from 14 per cent to 13 per cent, although it remained in the positive range for the fifth quarter running.
However, selling prices are expected to rise moderately in most sectors, led strongly by the mining, services and construction sectors, said Ms Chia.
The BOI results were also in line with similar studies done in recent months.
Last week, the HSBC Small Business Confidence Monitor revealed that small and medium-sized enterprises here were among the most confident in Asia, with more investing to expand in the first half of this year. The official growth forecast for the year was revised upwards last month from 7 to 9 per cent to 13 to 15 per cent.
With Singapore set for record growth, it came as no surprise that businesses were in a buoyant mood. Mr Alex Lau, managing director of Anacle, one of Singapore's fastest growing technology start-ups, said he was 'extremely positive' about the outlook for the rest of the year. 'Our order books have already surpassed our expectations, but the real question is how much of the recovery is driven by real demand and not government stimulus.'
Source: Straits Times, 29 Jul 2010
Bosses polled by credit rating firm D&B Singapore were largely positive and expect increases in profits, sales and new orders over the next three months.
D&B said the optimism was mainly down to the strong performance of key sectors here, with construction, services and manufacturing leading the way.
Ms Audrey Chia, a D&B senior director, also singled out the biomedical and electronics sectors as star performers, as the global recovery continues.
'A positive business outlook was observed across the board (for the third quarter) with the overall optimism index for both net profit and employment maintaining in the positive region,' she said.
'Nevertheless, the anxiety from Europe's sovereign debt crisis and the global financial fragility are starting to take their toll on overall business confidence with reported figures appearing less robust than in the previous quarter.'
Although less optimistic, most of the 200 companies polled by D&B still had high hopes for the third quarter.
The survey was to compile the Business Optimism Index (BOI), which compares the net percentages of the respondents' expectations in areas such as sales, profits and hiring activities with those in the previous quarter. A positive reading indicates optimism, a zero reading signals no change, while a negative one means the respondent expects a drop in performance.
'The majority of companies surveyed have indicated continued optimism towards their third-quarter performance for sales volume, net profit, selling price, employment and inventory,' said Ms Chia. 'Although overall sentiment is less bullish than in the second quarter.'
Compared with second-quarter figures, the third-quarter index for net profit dipped from 45 per cent to 26 per cent, sales volume from 41 per cent to 29 per cent, and new orders from 42 per cent to 35 per cent.
The BOI for employment also dipped from 14 per cent to 13 per cent, although it remained in the positive range for the fifth quarter running.
However, selling prices are expected to rise moderately in most sectors, led strongly by the mining, services and construction sectors, said Ms Chia.
The BOI results were also in line with similar studies done in recent months.
Last week, the HSBC Small Business Confidence Monitor revealed that small and medium-sized enterprises here were among the most confident in Asia, with more investing to expand in the first half of this year. The official growth forecast for the year was revised upwards last month from 7 to 9 per cent to 13 to 15 per cent.
With Singapore set for record growth, it came as no surprise that businesses were in a buoyant mood. Mr Alex Lau, managing director of Anacle, one of Singapore's fastest growing technology start-ups, said he was 'extremely positive' about the outlook for the rest of the year. 'Our order books have already surpassed our expectations, but the real question is how much of the recovery is driven by real demand and not government stimulus.'
Source: Straits Times, 29 Jul 2010
Tuesday, July 27, 2010
Biomed puts brake on June output growth
Industrial production records first fall in 7 months on sharp slowdown in biomed
(SINGAPORE) June's factory output fell short of expectations for the first time this year, as a slowdown in pharmaceutical output put the brakes on manufacturing's acceleration.
Industrial production last month rose 26.1 per cent from a year ago, way under consensus expectations for 36.7 per cent growth. Factories also produced 23.4 per cent less than they had in May - the first sequential, seasonally-adjusted fall in seven months.
'The drop is very technically driven by the biomedical cluster, a segment that has provided significant impetus to growth since the start of this year,' said RBS's Singapore economist Lim Su Sian.
Biomedical output's year-on-year growth slowed to 29.8 per cent as pharmaceutical plants produced 30.8 per cent more than they had last June. This was a sharp slowdown from growth in excess of 100 per cent the month before, and June's biomed output was less than half that recorded in May.
Excluding biomedical manufacturing, overall production grew 24.8 per cent from last June but fell 1.8 per cent from May, data released by the Economic Development Board yesterday shows. Biomedical output accounts for a fifth of Singapore's value-added, the second largest industry share after electronics' 30 per cent.
Growth in the latter sector slowed slightly, but was still a robust 46.8 per cent year-on-year, as semiconductors output grew 74.9 per cent thanks to strong demand for cellphones, personal computers and consumer electronic products.
The other sectors - precision engineering (33 per cent), general manufacturing (11 per cent ) and chemicals (7 per cent growth) - all saw their pace of growth slow by several percentage points too.
And transport engineering's output continued its year-on-year fall due to fewer ship conversion and repair jobs in the ship yards, which offset growth in the land and aerospace segments.
With six months of data now in, EDB said that the manufacturing economy expanded 41.6 per cent in the first half of 2010 from a year ago.
As signs of cooling off surface beneath the positive headline numbers, the second-half of 2010's 'tale of two halves' appears to have begun before the halfway mark, OCBC economist Selena Ling said.
'Are the headwinds coming from US and Europe, or China's slowing? It's not too clear at this stage, but the NODX numbers should show which countries' demand is facing growing resistance,' she said.
June's industrial production figures also back up other signs of slowdown like rising inventories seen in June's PMI and waning export momentum, said Citi economist Kit Wei Zheng.
HSBC economist Kim Song-yi thinks that though manufacturing will ease in coming months, the stretched labour market and wage pressures mean a tightening of monetary policy to control inflation risks is still a possibility.
Source: Business Times, 27 Jul 2010
(SINGAPORE) June's factory output fell short of expectations for the first time this year, as a slowdown in pharmaceutical output put the brakes on manufacturing's acceleration.
Industrial production last month rose 26.1 per cent from a year ago, way under consensus expectations for 36.7 per cent growth. Factories also produced 23.4 per cent less than they had in May - the first sequential, seasonally-adjusted fall in seven months.
'The drop is very technically driven by the biomedical cluster, a segment that has provided significant impetus to growth since the start of this year,' said RBS's Singapore economist Lim Su Sian.
Biomedical output's year-on-year growth slowed to 29.8 per cent as pharmaceutical plants produced 30.8 per cent more than they had last June. This was a sharp slowdown from growth in excess of 100 per cent the month before, and June's biomed output was less than half that recorded in May.
Excluding biomedical manufacturing, overall production grew 24.8 per cent from last June but fell 1.8 per cent from May, data released by the Economic Development Board yesterday shows. Biomedical output accounts for a fifth of Singapore's value-added, the second largest industry share after electronics' 30 per cent.
Growth in the latter sector slowed slightly, but was still a robust 46.8 per cent year-on-year, as semiconductors output grew 74.9 per cent thanks to strong demand for cellphones, personal computers and consumer electronic products.
The other sectors - precision engineering (33 per cent), general manufacturing (11 per cent ) and chemicals (7 per cent growth) - all saw their pace of growth slow by several percentage points too.
And transport engineering's output continued its year-on-year fall due to fewer ship conversion and repair jobs in the ship yards, which offset growth in the land and aerospace segments.
With six months of data now in, EDB said that the manufacturing economy expanded 41.6 per cent in the first half of 2010 from a year ago.
As signs of cooling off surface beneath the positive headline numbers, the second-half of 2010's 'tale of two halves' appears to have begun before the halfway mark, OCBC economist Selena Ling said.
'Are the headwinds coming from US and Europe, or China's slowing? It's not too clear at this stage, but the NODX numbers should show which countries' demand is facing growing resistance,' she said.
June's industrial production figures also back up other signs of slowdown like rising inventories seen in June's PMI and waning export momentum, said Citi economist Kit Wei Zheng.
HSBC economist Kim Song-yi thinks that though manufacturing will ease in coming months, the stretched labour market and wage pressures mean a tightening of monetary policy to control inflation risks is still a possibility.
Source: Business Times, 27 Jul 2010
Monday, July 26, 2010
Consumer confidence in Q2 takes a tumble
Singapore trails Vietnam but leads Malaysia, China, Indonesia, Thailand
(SINGAPORE) Consumers in Singapore remain among the most optimistic in the region - despite a drop in consumer confidence in the second quarter.
The Consumer Confidence Index of Singapore, as measured by InsightAsia, fell 12 points to 126 in Q2 after witnessing a strong upward trend since the lowest point of the recession. Singapore is still far above the neutral point of 100.
Consumers were thrilled when the economy emerged from the recession sooner than expected and are now becoming accustomed to positive economic circumstances.
InsightAsia, a market research group specialising in the Asia-Pacific region surveyed 10,800 people across six Asian markets.Although economic growth in Singapore continues to accelerate, consumers expressed lower confidence in economic circumstances. The downward correction of the Consumer Confidence Index is in line with other countries in the region that are also showing healthy growth figures. China, Malaysia and Vietnam also saw a decrease in consumer confidence - even though their economies are in good shape and have GDP growth forecasts of 5-10 per cent in 2010.
An unexpectedly swift recovery from the recession led to increasing consumer optimism, which then dropped slightly in Q2. Consumers in these countries remain confident, but their initial enthusiasm has waned somewhat.
Consumers in Singapore still feel that the economy is improving, though not as strongly as before. They have also moderated their expectations for future economic growth. Singaporeans maintain a high level of satisfaction with their financial well-being, but have moderated their optimism about the coming year.
Overall, Singaporean consumers still have a very positive view of economic circumstances, resulting in a Consumer Confidence Index of 126.
Singapore trails slightly behind Vietnam (128) but leads Malaysia (118), China (114), Indonesia (93) and Thailand (83); all countries that are recording positive growth figures.
Singapore's recovery from the recession continued into Q2. A record year-on-year GDP growth of 19.3 per cent outstrips the 16.9 per cent growth recorded in Q1 and far exceeds growth figures of other economies in the region.
This very strong growth was driven by exports and tourism. Exports increased particularly through pharmaceuticals and electronics, while new attractions drew more tourists to the island state.
The year-on-year growth figures are calculated against a low base, as the beginning of 2009 was the low point of the recession. Growth in the remaining quarters of 2010 will be calculated against higher base figures. Therefore GDP growth is expected to decelerate in the second half of 2010 and full-year growth is expected to register at 13-15 per cent.
The robust economic growth of China has benefited many other economies in the region. The Chinese government is taking measures to reduce the risks of overheating the economy. Lower demand in China will reduce the exports of other countries in Southeast Asia.
Along with a debt crisis in the EU and the hesitant recovery of the US economy, this may slow growth in South-east Asia in the second half of 2010. However, analysts are positive about growth prospects in the region. The IMF estimates regional economic growth for 2010 and 2011 of around 6 per cent.
The writer is head of Consumer Confidence Index at InsightAsia Research Group
Source: Business Times, 26 Jul 2010
(SINGAPORE) Consumers in Singapore remain among the most optimistic in the region - despite a drop in consumer confidence in the second quarter.
The Consumer Confidence Index of Singapore, as measured by InsightAsia, fell 12 points to 126 in Q2 after witnessing a strong upward trend since the lowest point of the recession. Singapore is still far above the neutral point of 100.
Consumers were thrilled when the economy emerged from the recession sooner than expected and are now becoming accustomed to positive economic circumstances.
InsightAsia, a market research group specialising in the Asia-Pacific region surveyed 10,800 people across six Asian markets.Although economic growth in Singapore continues to accelerate, consumers expressed lower confidence in economic circumstances. The downward correction of the Consumer Confidence Index is in line with other countries in the region that are also showing healthy growth figures. China, Malaysia and Vietnam also saw a decrease in consumer confidence - even though their economies are in good shape and have GDP growth forecasts of 5-10 per cent in 2010.
An unexpectedly swift recovery from the recession led to increasing consumer optimism, which then dropped slightly in Q2. Consumers in these countries remain confident, but their initial enthusiasm has waned somewhat.
Consumers in Singapore still feel that the economy is improving, though not as strongly as before. They have also moderated their expectations for future economic growth. Singaporeans maintain a high level of satisfaction with their financial well-being, but have moderated their optimism about the coming year.
Overall, Singaporean consumers still have a very positive view of economic circumstances, resulting in a Consumer Confidence Index of 126.
Singapore trails slightly behind Vietnam (128) but leads Malaysia (118), China (114), Indonesia (93) and Thailand (83); all countries that are recording positive growth figures.
Singapore's recovery from the recession continued into Q2. A record year-on-year GDP growth of 19.3 per cent outstrips the 16.9 per cent growth recorded in Q1 and far exceeds growth figures of other economies in the region.
This very strong growth was driven by exports and tourism. Exports increased particularly through pharmaceuticals and electronics, while new attractions drew more tourists to the island state.
The year-on-year growth figures are calculated against a low base, as the beginning of 2009 was the low point of the recession. Growth in the remaining quarters of 2010 will be calculated against higher base figures. Therefore GDP growth is expected to decelerate in the second half of 2010 and full-year growth is expected to register at 13-15 per cent.
The robust economic growth of China has benefited many other economies in the region. The Chinese government is taking measures to reduce the risks of overheating the economy. Lower demand in China will reduce the exports of other countries in Southeast Asia.
Along with a debt crisis in the EU and the hesitant recovery of the US economy, this may slow growth in South-east Asia in the second half of 2010. However, analysts are positive about growth prospects in the region. The IMF estimates regional economic growth for 2010 and 2011 of around 6 per cent.
The writer is head of Consumer Confidence Index at InsightAsia Research Group
Source: Business Times, 26 Jul 2010
Saturday, July 24, 2010
Inflation rises slowest for low earners
RISING prices, in the wake of Singapore's strong economic rebound, affected households across all income groups in the first six months of this year, according to figures released yesterday.
But cost increases were slowest for the lowest earners - those in the bottom 20 per cent by household income.
This is a departure from recent years when rising prices hit low-income households hardest. Figures from the Statistics Department show that the consumer price index (CPI) for them rose by 1.6 per cent over the same period a year ago.
By contrast, the rise was 2.1 per cent for the highest-earning households - the top 20 per cent of households.
The CPI increase for the 60 per cent of households in between these two segments was 1.9 per cent. The overall CPI for all households was 2.0 per cent in the first six months of the year.
A widely used index for inflation, the CPI assesses changes in the prices of a basket of goods and services - such as food, housing and transport - commonly bought by most households.
The Department of Statistics, which released the figures, said the CPI increase for the lowest 20 per cent income group was mainly due to higher electricity tariffs, service and conservancy charges and food prices among other things.
'The highest 20 per cent income group experienced a higher inflation rate compared with other income groups... on account of their relatively larger weights for cars and petrol, which registered significant price increases during this period,' it added.
A cut in certificate of entitlements this year has sent their prices up.
West Coast GRC MP Ho Geok Choo said one reason inflation was moderated for poorer families was due to the efforts of cooperatives like NTUC FairPrice in keeping prices relatively stable.
Such families spend a larger proportion of their income on basics like food.
But economist Tan Khee Giap of the Lee Kuan Yew School of Public Policy said there could be a return to the trend of the poorest being hit hardest if their wages do not surpass inflation as the economy picks up. 'One should not read too much into these figures yet,' he said.
Holland-Bukit Timah GRC MP Liang Eng Hwa, like Madam Ho, noted that as costs of other goods and services rise, the lower-income may feel the pinch.
For example, utility prices have risen, he noted.
In January, electricity prices rose 5.4 per cent to 22.87 cents per kilowatt hour (kwh), fuelled by rising oil prices. This worked out to a hike of $4.70 a month for a four-room flat.
Electricity prices went up further to 23.56 cents per kwh in April, and now stand at 24.13 cents per kwh.
Said Mr Liang: 'While inflation is not really a concern yet, it is something the Government must watch closely.'
In a separate statement, the Statistics Department said inflation for last month climbed less than expected.
Prices rose 2.7 per cent compared to the same month last year, below economists' forecast of a 3.5 per cent jump.
Almost all goods and services categories saw price inflation for the year to June, led by rising transport costs.
But when compared to May this year, the June prices dipped by 1 per cent.
This was due to lower car prices compared to May and petrol prices, service and conservancy charge rebates, and cheaper clothes and shoes during the Great Singapore Sale.
Still, economists expect inflation to pick up in the coming months, although Citigroup's Kit Wei Zheng believes the pace will moderate as economic growth eases in the second half of the year.
Most economists also believe the Monetary Authority of Singapore will continue its policy of a gradual appreciation of the Singapore dollar at its next review, rather than tighten policy to further counter inflation.
Source: Straits Times, 24 Jul 2010
But cost increases were slowest for the lowest earners - those in the bottom 20 per cent by household income.
This is a departure from recent years when rising prices hit low-income households hardest. Figures from the Statistics Department show that the consumer price index (CPI) for them rose by 1.6 per cent over the same period a year ago.
By contrast, the rise was 2.1 per cent for the highest-earning households - the top 20 per cent of households.
The CPI increase for the 60 per cent of households in between these two segments was 1.9 per cent. The overall CPI for all households was 2.0 per cent in the first six months of the year.
A widely used index for inflation, the CPI assesses changes in the prices of a basket of goods and services - such as food, housing and transport - commonly bought by most households.
The Department of Statistics, which released the figures, said the CPI increase for the lowest 20 per cent income group was mainly due to higher electricity tariffs, service and conservancy charges and food prices among other things.
'The highest 20 per cent income group experienced a higher inflation rate compared with other income groups... on account of their relatively larger weights for cars and petrol, which registered significant price increases during this period,' it added.
A cut in certificate of entitlements this year has sent their prices up.
West Coast GRC MP Ho Geok Choo said one reason inflation was moderated for poorer families was due to the efforts of cooperatives like NTUC FairPrice in keeping prices relatively stable.
Such families spend a larger proportion of their income on basics like food.
But economist Tan Khee Giap of the Lee Kuan Yew School of Public Policy said there could be a return to the trend of the poorest being hit hardest if their wages do not surpass inflation as the economy picks up. 'One should not read too much into these figures yet,' he said.
Holland-Bukit Timah GRC MP Liang Eng Hwa, like Madam Ho, noted that as costs of other goods and services rise, the lower-income may feel the pinch.
For example, utility prices have risen, he noted.
In January, electricity prices rose 5.4 per cent to 22.87 cents per kilowatt hour (kwh), fuelled by rising oil prices. This worked out to a hike of $4.70 a month for a four-room flat.
Electricity prices went up further to 23.56 cents per kwh in April, and now stand at 24.13 cents per kwh.
Said Mr Liang: 'While inflation is not really a concern yet, it is something the Government must watch closely.'
In a separate statement, the Statistics Department said inflation for last month climbed less than expected.
Prices rose 2.7 per cent compared to the same month last year, below economists' forecast of a 3.5 per cent jump.
Almost all goods and services categories saw price inflation for the year to June, led by rising transport costs.
But when compared to May this year, the June prices dipped by 1 per cent.
This was due to lower car prices compared to May and petrol prices, service and conservancy charge rebates, and cheaper clothes and shoes during the Great Singapore Sale.
Still, economists expect inflation to pick up in the coming months, although Citigroup's Kit Wei Zheng believes the pace will moderate as economic growth eases in the second half of the year.
Most economists also believe the Monetary Authority of Singapore will continue its policy of a gradual appreciation of the Singapore dollar at its next review, rather than tighten policy to further counter inflation.
Source: Straits Times, 24 Jul 2010
Monday, July 19, 2010
Tharman: GDP call based on short-term rebound
(SINGAPORE) While Singapore's latest growth forecast of 13-15 per cent had surpassed expectations, it reflects a short-term rebound, says Finance Minister Tharman Shanmugaratnam.
'To put it in perspective, we've had two years averaging nearly zero per cent growth,' Channel News Asia reported him as saying. 'This year, assuming it's 15 per cent - taking the upper end of the range - that's 5 per cent over three years, which is a good performance but not out of sync with what we think is the underlying rate of growth of the Singapore economy, which is 3-5 per cent going forward.'
Mr Tharman added that the focus now was to ensure that an annual growth rate of 3-5 per cent can be sustained through productivity growth.
The Ministry of Trade and Industry last week bumped up the official forecast of Singapore's 2010 GDP growth by an unprecedented six points to 13-15 per cent, after a sizzling 18 per cent pace in the first half.
The government's stunningly strong growth forecast on Wednesday caught many by surprise - and prompted an upward revision in the estimates of many private sector economists.The last time Singapore's full-year growth crossed 13 per cent was in 1972 when the economy grew 13.5 per cent - not far from the all-time high of 13.8 per cent in 1970. Still, MTI made it clear that the first half's 'exceptionally strong growth' is unlikely to be sustained into the second half, with a 'more subdued outlook' up ahead.
Source: Business Times, 19 Jul 2010
'To put it in perspective, we've had two years averaging nearly zero per cent growth,' Channel News Asia reported him as saying. 'This year, assuming it's 15 per cent - taking the upper end of the range - that's 5 per cent over three years, which is a good performance but not out of sync with what we think is the underlying rate of growth of the Singapore economy, which is 3-5 per cent going forward.'
Mr Tharman added that the focus now was to ensure that an annual growth rate of 3-5 per cent can be sustained through productivity growth.
The Ministry of Trade and Industry last week bumped up the official forecast of Singapore's 2010 GDP growth by an unprecedented six points to 13-15 per cent, after a sizzling 18 per cent pace in the first half.
The government's stunningly strong growth forecast on Wednesday caught many by surprise - and prompted an upward revision in the estimates of many private sector economists.The last time Singapore's full-year growth crossed 13 per cent was in 1972 when the economy grew 13.5 per cent - not far from the all-time high of 13.8 per cent in 1970. Still, MTI made it clear that the first half's 'exceptionally strong growth' is unlikely to be sustained into the second half, with a 'more subdued outlook' up ahead.
Source: Business Times, 19 Jul 2010
Strong Q2 numbers like water off bourse's back
The benchmark Straits Times Index see-saws amid soft trading volumes
(SINGAPORE) Even as Singapore's strong second- quarter GDP numbers sent economists rushing to raise their forecasts for the full year, the stock market barely stirred.
The real popping of the champagne will probably come only when Q2 corporate earnings show that economic boom has indeed found its way to companies' revenues and bottom lines, which in turn would provide a strong impetus for wage hikes, analysts say.
The benchmark Straits Times Index (STI) has see-sawed amid soft trading volumes, rising by 24.11 points or 0.8 per cent on Wednesday when the Q2 economic data was released, before slipping 9.26 points or 0.3 per cent the following day on fears of a slowing US recovery and a potential slowdown in China. Last Friday, the STI edged up 14.17 points or 0.5 per cent to 2,957.72, closing the week 0.99 per cent higher.
Some analysts note that the revised Q1 growth of 16.9 per cent and the record 19.3 per cent Q2 surge were partly a technical bounce from a low base last year. But the average person has yet to feel the benefits, they added.
'The numbers themselves are not telling the full picture,' said UOB KayHian executive director Chan Tuck Sing. 'I have not seen the economic impact from these numbers filtering through to the man in the street.
'I would be more excited if companies reporting second-quarter earnings show significant improvements in earnings. Then, that's real money flowing through to the companies.'
The Q2 economic numbers have raised hopes of positive surprises in the upcoming earnings reporting season and provided a snapshot of the type of sectors that are likely to have done well.
Mr Chan expects manufacturing and biomedical companies to post sterling Q2 results.
SIAS Research vice-president Roger Tan anticipates rosy report cards from consumer plays - both domestic and export-oriented - particularly those in the consumer discretionary sector.
'Technology companies would continue to show strong numbers either matching or beating analysts' expectations,' he added. 'The banks also look like they could come in with strong numbers.'
If the reporting season yields strong earnings and bullish outlooks from company managements, the STI could breach the 3,000 mark, Mr Tan said. SIAS has an STI target of 3,100-3,200 points by year-end.
Credit Suisse maintains 'market weight' on the Singapore market following the release of the Q2 GDP numbers, which is one level below 'overweight'. It expects wages to start picking up over the next two to three quarters, which would boost demand for consumer-related sectors.
'The key beneficiaries on which we are positive include SPH, SIA, CapitaLand, FCT (Frasers Centrepoint Trust) and Raffles Medical. The robust economic environment also augurs well for the banks,' Credit Suisse said in a report last week.
'Banks' earnings could be boosted by 2 per cent for every 5 per cent incremental loan growth. Asset quality should also benefit,' Credit Suisse analysts said.
On the other hand, they noted that companies that are wage-sensitive and not in a strong position to pass on the incremental costs immediately include Hi-P, ST Engineering, ComfortDelgro, Cosco Corp, SATS, Hong Leong Asia and SMRT.
CIMB head of research Kenneth Ng said he believes the hospitality, airline and Reit sectors will surprise on the upside, while potential disappointments could come from plantation companies.
Calling equities a 'strong buy', Wong Kok Hoi, managing director and chief investment officer of APS Asset Management, noted that equities are currently not expensive relative to other asset classes. In the current low interest rate environment, equities offer attractive yields of about 10 per cent compared with bond yields of about 2 per cent.
Historically, Singapore's GDP and the STI have been strongly correlated. A Barclays Capital research report on Singapore published last year, for instance, showed a graph of the quarter-on-quarter changes in the Singapore GDP and STI since 1997, and the two lines tracked each other well.
But in the near term, market performance continues to hinge on macro issues such as the effects of deleveraging, said Mr Ng. 'Until those issues are resolved, the markets will find it difficult to forge significantly higher.'
Mr Ng is in no hurry to upgrade his market earnings per share (EPS) forecast. In fact, CIMB downgraded its rating on Singapore from 'overweight' to 'neutral' in June as a result of those macro concerns.
Though the World Cup season - blamed for taking some of the steam out of the stock market - has ended, the market still lacks a catalyst right now, said Mr Chan of UOB KayHian.
Should corporate earnings turn out to be mediocre and fail to excite investors, the market would remain in range-bound trading, he added.
Source: Business Times, 19 Jul 2010
(SINGAPORE) Even as Singapore's strong second- quarter GDP numbers sent economists rushing to raise their forecasts for the full year, the stock market barely stirred.
The real popping of the champagne will probably come only when Q2 corporate earnings show that economic boom has indeed found its way to companies' revenues and bottom lines, which in turn would provide a strong impetus for wage hikes, analysts say.
The benchmark Straits Times Index (STI) has see-sawed amid soft trading volumes, rising by 24.11 points or 0.8 per cent on Wednesday when the Q2 economic data was released, before slipping 9.26 points or 0.3 per cent the following day on fears of a slowing US recovery and a potential slowdown in China. Last Friday, the STI edged up 14.17 points or 0.5 per cent to 2,957.72, closing the week 0.99 per cent higher.
Some analysts note that the revised Q1 growth of 16.9 per cent and the record 19.3 per cent Q2 surge were partly a technical bounce from a low base last year. But the average person has yet to feel the benefits, they added.
'The numbers themselves are not telling the full picture,' said UOB KayHian executive director Chan Tuck Sing. 'I have not seen the economic impact from these numbers filtering through to the man in the street.
'I would be more excited if companies reporting second-quarter earnings show significant improvements in earnings. Then, that's real money flowing through to the companies.'
The Q2 economic numbers have raised hopes of positive surprises in the upcoming earnings reporting season and provided a snapshot of the type of sectors that are likely to have done well.
Mr Chan expects manufacturing and biomedical companies to post sterling Q2 results.
SIAS Research vice-president Roger Tan anticipates rosy report cards from consumer plays - both domestic and export-oriented - particularly those in the consumer discretionary sector.
'Technology companies would continue to show strong numbers either matching or beating analysts' expectations,' he added. 'The banks also look like they could come in with strong numbers.'
If the reporting season yields strong earnings and bullish outlooks from company managements, the STI could breach the 3,000 mark, Mr Tan said. SIAS has an STI target of 3,100-3,200 points by year-end.
Credit Suisse maintains 'market weight' on the Singapore market following the release of the Q2 GDP numbers, which is one level below 'overweight'. It expects wages to start picking up over the next two to three quarters, which would boost demand for consumer-related sectors.
'The key beneficiaries on which we are positive include SPH, SIA, CapitaLand, FCT (Frasers Centrepoint Trust) and Raffles Medical. The robust economic environment also augurs well for the banks,' Credit Suisse said in a report last week.
'Banks' earnings could be boosted by 2 per cent for every 5 per cent incremental loan growth. Asset quality should also benefit,' Credit Suisse analysts said.
On the other hand, they noted that companies that are wage-sensitive and not in a strong position to pass on the incremental costs immediately include Hi-P, ST Engineering, ComfortDelgro, Cosco Corp, SATS, Hong Leong Asia and SMRT.
CIMB head of research Kenneth Ng said he believes the hospitality, airline and Reit sectors will surprise on the upside, while potential disappointments could come from plantation companies.
Calling equities a 'strong buy', Wong Kok Hoi, managing director and chief investment officer of APS Asset Management, noted that equities are currently not expensive relative to other asset classes. In the current low interest rate environment, equities offer attractive yields of about 10 per cent compared with bond yields of about 2 per cent.
Historically, Singapore's GDP and the STI have been strongly correlated. A Barclays Capital research report on Singapore published last year, for instance, showed a graph of the quarter-on-quarter changes in the Singapore GDP and STI since 1997, and the two lines tracked each other well.
But in the near term, market performance continues to hinge on macro issues such as the effects of deleveraging, said Mr Ng. 'Until those issues are resolved, the markets will find it difficult to forge significantly higher.'
Mr Ng is in no hurry to upgrade his market earnings per share (EPS) forecast. In fact, CIMB downgraded its rating on Singapore from 'overweight' to 'neutral' in June as a result of those macro concerns.
Though the World Cup season - blamed for taking some of the steam out of the stock market - has ended, the market still lacks a catalyst right now, said Mr Chan of UOB KayHian.
Should corporate earnings turn out to be mediocre and fail to excite investors, the market would remain in range-bound trading, he added.
Source: Business Times, 19 Jul 2010
Friday, July 16, 2010
Slower growth forecast for next year
Strong expansion this year leading to 'high base' effect, moderating rate next year, say economists
THE Singapore economy, which may shoot off the charts with its searing expansion this year, is creating another sort of statistical problem - this time for next year's growth.
Growth figures for this year are so scintillating that some economists have started downgrading the numbers for next year, no thanks to a 'high base' effect.
'One way to think of the economy is like a pendulum: the stronger we swing in one direction - up - this year, the greater the risk of a pullback at some stage,' said OCBC economist Selena Ling.
The economy ballooned by a formidable 18.1 per cent in the first half of this year over the same period last year, and is expected to grow by 13 to 15 per cent for the full year, the Ministry of Trade and Industry said on Wednesday.
But most economists expect this stupendous growth rate to moderate to between 4 and 5 per cent next year.
'First-half growth was stellar, and the economy cannot sustain such rapid growth,' said JP Morgan economist Matt Hildebrandt, who expects 5 per cent growth next year. 'Thus, growth is going to cool in the second half and it will likely be closer to trend in 2011 than what we have seen over the last year.'
Economists say this year's record growth is exaggerated by a low base last year due to the recession, but the opposite effect is expected to apply next year.
With such a high base this year, growth in the first half of next year could 'easily' go into negative territory, said Standard Chartered economist Alvin Liew. He expects Singapore to grow by 4 per cent for the whole of next year.
Citi economist Kit Wei Zheng on Wednesday 'fine-tuned' his forecast for next year to 4.6 per cent, from a previous projection of 5 per cent.
'The high base in the first half of 2010 will set a high hurdle for growth in the first half of 2011,' he said.
But the numbers are only part of the story. What is more important are the underlying economic trends that are expected to play out next year.
Economists such as DBS Bank's Irvin Seah have highlighted a looming slowdown in the manufacturing sector, which has been powering the rebound so far.
'Manufacturing growth on a sequential basis has cooled, and manufacturing indexes in Singapore and across key markets have peaked and are tapering off,' said Mr Seah, whose growth forecast for next year is 4.5 per cent.
Agreeing, Mr Hildebrandt said: 'Most of the demand for electronics and other manufacturing goods comes externally, so the clouded outlooks for the United States and European Union, and the more moderate growth expected in China, provide a lot of uncertainty.'
On the bright side, the domestic services industry should be supported by rising wages amid the tight labour market, said Ms Ling. 'While the external headwinds are brewing, so far, domestic fundamentals remain healthy,' she added.
The services sector has not surged as much as manufacturing, which stands it in good stead now, said Mr David Cohen of Action Economics. He is tipping 4.5 per cent growth next year.
'The swing (in services) has been somewhat less pronounced, but the sector is still showing a healthy recovery to pre- crisis highs,' he said.
'It is presumably less vulnerable to a slowdown anytime soon, supported by demand from the region, which continues to pace global growth.'
The two integrated resorts should boost tourist spending and financial and business services are expected to continue doing well next year, said economists. But slower trade flows ahead could weigh down wholesale and transportation services, said Mr Seah.
Source: Straits Times, 16 Jul 2010
THE Singapore economy, which may shoot off the charts with its searing expansion this year, is creating another sort of statistical problem - this time for next year's growth.
Growth figures for this year are so scintillating that some economists have started downgrading the numbers for next year, no thanks to a 'high base' effect.
'One way to think of the economy is like a pendulum: the stronger we swing in one direction - up - this year, the greater the risk of a pullback at some stage,' said OCBC economist Selena Ling.
The economy ballooned by a formidable 18.1 per cent in the first half of this year over the same period last year, and is expected to grow by 13 to 15 per cent for the full year, the Ministry of Trade and Industry said on Wednesday.
But most economists expect this stupendous growth rate to moderate to between 4 and 5 per cent next year.
'First-half growth was stellar, and the economy cannot sustain such rapid growth,' said JP Morgan economist Matt Hildebrandt, who expects 5 per cent growth next year. 'Thus, growth is going to cool in the second half and it will likely be closer to trend in 2011 than what we have seen over the last year.'
Economists say this year's record growth is exaggerated by a low base last year due to the recession, but the opposite effect is expected to apply next year.
With such a high base this year, growth in the first half of next year could 'easily' go into negative territory, said Standard Chartered economist Alvin Liew. He expects Singapore to grow by 4 per cent for the whole of next year.
Citi economist Kit Wei Zheng on Wednesday 'fine-tuned' his forecast for next year to 4.6 per cent, from a previous projection of 5 per cent.
'The high base in the first half of 2010 will set a high hurdle for growth in the first half of 2011,' he said.
But the numbers are only part of the story. What is more important are the underlying economic trends that are expected to play out next year.
Economists such as DBS Bank's Irvin Seah have highlighted a looming slowdown in the manufacturing sector, which has been powering the rebound so far.
'Manufacturing growth on a sequential basis has cooled, and manufacturing indexes in Singapore and across key markets have peaked and are tapering off,' said Mr Seah, whose growth forecast for next year is 4.5 per cent.
Agreeing, Mr Hildebrandt said: 'Most of the demand for electronics and other manufacturing goods comes externally, so the clouded outlooks for the United States and European Union, and the more moderate growth expected in China, provide a lot of uncertainty.'
On the bright side, the domestic services industry should be supported by rising wages amid the tight labour market, said Ms Ling. 'While the external headwinds are brewing, so far, domestic fundamentals remain healthy,' she added.
The services sector has not surged as much as manufacturing, which stands it in good stead now, said Mr David Cohen of Action Economics. He is tipping 4.5 per cent growth next year.
'The swing (in services) has been somewhat less pronounced, but the sector is still showing a healthy recovery to pre- crisis highs,' he said.
'It is presumably less vulnerable to a slowdown anytime soon, supported by demand from the region, which continues to pace global growth.'
The two integrated resorts should boost tourist spending and financial and business services are expected to continue doing well next year, said economists. But slower trade flows ahead could weigh down wholesale and transportation services, said Mr Seah.
Source: Straits Times, 16 Jul 2010
Technical recession in this boom year?
Pharma volatility, weird maths may join hands
ONE year after coming off a recession of global proportions, the Singapore economy is headed for possibly a new all-time high growth rate, with GDP expected to surge by between 13 and 15 per cent in 2010. But a technical recession - defined as two consecutive quarters of sequential contraction - within the same year of historic high growth?
That may well be the peculiar scenario shaping up, going by the newly hoisted 13-15 per cent official growth forecast.
As the economists who have dug into the data - just working out the maths, actually - point out, with 18 per cent growth for the first six months in the bag, even if the growth momentum or sequential pace stays flat through the third and fourth quarters, full-year growth would still round out to 17 per cent or a bit more.
Market forecasts of Singapore's 2010 growth, newly bumped up following the release of the latest quarterly estimates on Wednesday, are now mostly in line with the official 13-15 per cent projection, with at least five - from Goldman Sachs, Daiwa Capital Markets, Morgan Stanley, Citigroup and Credit Suisse - going beyond. Goldman Sachs has the highest forecast at 16.5 per cent. Which means that everyone is expecting at least one negative quarter (in sequential or quarter-on-quarter terms) - or what most describe as a 'technical pull-back' from the heady heights of the first six months.
Goldman Sachs, for instance, is looking at a 5 per cent adjusted and annualised q-on-q contraction in Q3, while Citigroup - with a 15.5 per cent growth forecast for the year - reckons it will be more like an 11 per cent pull-back in Q3. In any case, it will be quite a comedown from the blistering 46 per cent and 26 per cent growth notched up in Q1 and Q2.
But at least two forecasters - Capital Economics and JP Morgan - whose full-year growth estimates of 14-14.5 per cent are within the official projection, are looking at two sequential contractions, in Q3 and Q4. A 'technical' recession, in other words.
As a Morgan Stanley research report puts it: 'Our mathematical exercise shows that even if sequential declines of the type seen during the Lehman event in 2008 were to happen, annual 2010 growth would still come round to 13-14 per cent.'
So the official forecast of 13-15 per cent growth necessarily assumes a negative quarter in either Q3 or Q4 - or both. And the Ministry of Trade and Industry has, in fact - though in not quite such words - flagged so as well.
In its statement on the revised 2010 growth forecast, MTI said: 'While year-on-year growth rates in the second half will be healthy, sequential growth from current levels of economic activity will be low.'
It also hinted at what would likely cause the sharp slowdown in growth momentum in the second half. Industry-specific factors, such as plant maintenance shutdowns in the biomedical manufacturing cluster, will drag down growth, it said.
The pharmaceutical volatility that powered the stratospheric surges in manufacturing output in Q1 and Q2 is also likely to plunge the sector into the red, in sequential terms, in the second half. Payback time.
In other words, the second half 'recession' - if it ensues - should be one that is merely statistical beyond the technical sense, with the rest of the economy hopefully still healthy, with no loss of jobs nor decline in incomes and welfare.
Here, prospects are mostly externally driven. On the one hand, Singapore's GDP is now way past its pre-recession peak in Q1 2008 - a good 13 per cent higher, as a couple of economists note. The economy has recouped its recession losses - and scaled new heights.
But the stream of new data out of the US, even in the past couple of days, points increasingly to 'imminent slowdown' ahead.
For now, MTI reckons a double-dip recession in the major economies 'remains unlikely at this juncture', even if the pace of the global recovery has moderated. But that probably accounts for the cautionary stance behind its 13-15 per cent growth forecast - which some see as characteristically 'conservative'. And one that does not preclude the peculiar phenomenon of a 'recession' in a boom year.
Source: Business Times, 16 Jul 2010
ONE year after coming off a recession of global proportions, the Singapore economy is headed for possibly a new all-time high growth rate, with GDP expected to surge by between 13 and 15 per cent in 2010. But a technical recession - defined as two consecutive quarters of sequential contraction - within the same year of historic high growth?
That may well be the peculiar scenario shaping up, going by the newly hoisted 13-15 per cent official growth forecast.
As the economists who have dug into the data - just working out the maths, actually - point out, with 18 per cent growth for the first six months in the bag, even if the growth momentum or sequential pace stays flat through the third and fourth quarters, full-year growth would still round out to 17 per cent or a bit more.
Market forecasts of Singapore's 2010 growth, newly bumped up following the release of the latest quarterly estimates on Wednesday, are now mostly in line with the official 13-15 per cent projection, with at least five - from Goldman Sachs, Daiwa Capital Markets, Morgan Stanley, Citigroup and Credit Suisse - going beyond. Goldman Sachs has the highest forecast at 16.5 per cent. Which means that everyone is expecting at least one negative quarter (in sequential or quarter-on-quarter terms) - or what most describe as a 'technical pull-back' from the heady heights of the first six months.
Goldman Sachs, for instance, is looking at a 5 per cent adjusted and annualised q-on-q contraction in Q3, while Citigroup - with a 15.5 per cent growth forecast for the year - reckons it will be more like an 11 per cent pull-back in Q3. In any case, it will be quite a comedown from the blistering 46 per cent and 26 per cent growth notched up in Q1 and Q2.
But at least two forecasters - Capital Economics and JP Morgan - whose full-year growth estimates of 14-14.5 per cent are within the official projection, are looking at two sequential contractions, in Q3 and Q4. A 'technical' recession, in other words.
As a Morgan Stanley research report puts it: 'Our mathematical exercise shows that even if sequential declines of the type seen during the Lehman event in 2008 were to happen, annual 2010 growth would still come round to 13-14 per cent.'
So the official forecast of 13-15 per cent growth necessarily assumes a negative quarter in either Q3 or Q4 - or both. And the Ministry of Trade and Industry has, in fact - though in not quite such words - flagged so as well.
In its statement on the revised 2010 growth forecast, MTI said: 'While year-on-year growth rates in the second half will be healthy, sequential growth from current levels of economic activity will be low.'
It also hinted at what would likely cause the sharp slowdown in growth momentum in the second half. Industry-specific factors, such as plant maintenance shutdowns in the biomedical manufacturing cluster, will drag down growth, it said.
The pharmaceutical volatility that powered the stratospheric surges in manufacturing output in Q1 and Q2 is also likely to plunge the sector into the red, in sequential terms, in the second half. Payback time.
In other words, the second half 'recession' - if it ensues - should be one that is merely statistical beyond the technical sense, with the rest of the economy hopefully still healthy, with no loss of jobs nor decline in incomes and welfare.
Here, prospects are mostly externally driven. On the one hand, Singapore's GDP is now way past its pre-recession peak in Q1 2008 - a good 13 per cent higher, as a couple of economists note. The economy has recouped its recession losses - and scaled new heights.
But the stream of new data out of the US, even in the past couple of days, points increasingly to 'imminent slowdown' ahead.
For now, MTI reckons a double-dip recession in the major economies 'remains unlikely at this juncture', even if the pace of the global recovery has moderated. But that probably accounts for the cautionary stance behind its 13-15 per cent growth forecast - which some see as characteristically 'conservative'. And one that does not preclude the peculiar phenomenon of a 'recession' in a boom year.
Source: Business Times, 16 Jul 2010
Thursday, July 15, 2010
Exports surge 29%, may have peaked: Economists
EXPORTS shot ahead last month with shipments to Europe rocketing up 75 per cent over the same period last month, despite the debt crisis in the region rocking global markets.
All of Singapore's top 10 destinations took in more exports in June, giving the sector an overall increase of 29 per cent for the month - eclipsing economists' tips of a 23 per cent rise.
A boost in pharmaceutical shipments helped to magnify figures compared to a low base last year, said Barclays Capital economist Leong Wai Ho.
Exports to Europe also rose because they are 'headed largely for the core European markets of Germany, the Netherlands and France, which have been less affected by problems in southern Europe', he added.
Aside from Europe, exports to China grew 39 per cent last month from the year before, following a 64 per cent rise in May, while exports to Japan jumped 50 per cent, according to IE Singapore figures yesterday.
Electronics exports continued to expand, rising 44 per cent last month, while non-electronics products, which include pharmaceuticals, grew 21 per cent over the same month last year.
'China's trading partners are expected to benefit from the strong performance of Chinese imports. Imports of our major Asian trading partners, for example, Indonesia and Malaysia, also grew...This has had a positive impact on Singapore's exports,' said IE Singapore yesterday.
'Global semiconductor sales are expected to grow at a much faster pace than in 2009,' it added.
The June numbers have rounded out the second quarter, which had overall export growth of 28per cent over the same three months last year.
Such robust numbers have led to a rethink on Singapore's growth prospects.
The Government, citing the stronger-than-expected trade expansion in the second quarter, buoyant demand from Asia and a continued boom in the semiconductor industry, has revised its forecast for non-oil domestic exports growth this year to 17 to 19 per cent, up from a 15 to 17 per cent prediction.
Total trade growth this year has also been revised upwards from between 14 and 16 per cent to 17 to 19 per cent.
But economists warn that export momentum appears to have reached a peak and is due for a slowdown in the second half of the year.
Month-on-month seasonally adjusted figures have decreased marginally for the second straight month, while the pace of growth in electronics has also slowed.
Non-oil domestic exports last month fell 0.1 per cent from May, following a 0.2 per cent fall in May from April.
Electronics shipments last month grew 1.7 per cent from May, compared to a 13.7 per cent jump from April to May.
'Easing momentum was also seen in other trade components, such as non-oil re-exports and non-oil retained imports of intermediate goods,' said Citigroup economist Kit Wei Zheng.
HSBC economist Frederic Neumann said that since Singapore is coming from a very high export level, a 'cool-down does not in itself imply a hard landing'.
Some economists also expect lingering debt problems in Europe to gather pace over the rest of the year.
The Ministry of Trade and Industry said that fiscal austerity measures in some European economies and the weakening of the euro could further weaken domestic demand in Europe.
----------------------------------------------
BENEFITS FROM CHINA
'China's trading partners are expected to benefit from the strong performance of Chinese imports. Imports of our major Asian trading partners...also grew. This has had a positive impact on Singapore's exports.'
IE Singapore
Source: Straits Times, 15 Jul 2010
All of Singapore's top 10 destinations took in more exports in June, giving the sector an overall increase of 29 per cent for the month - eclipsing economists' tips of a 23 per cent rise.
A boost in pharmaceutical shipments helped to magnify figures compared to a low base last year, said Barclays Capital economist Leong Wai Ho.
Exports to Europe also rose because they are 'headed largely for the core European markets of Germany, the Netherlands and France, which have been less affected by problems in southern Europe', he added.
Aside from Europe, exports to China grew 39 per cent last month from the year before, following a 64 per cent rise in May, while exports to Japan jumped 50 per cent, according to IE Singapore figures yesterday.
Electronics exports continued to expand, rising 44 per cent last month, while non-electronics products, which include pharmaceuticals, grew 21 per cent over the same month last year.
'China's trading partners are expected to benefit from the strong performance of Chinese imports. Imports of our major Asian trading partners, for example, Indonesia and Malaysia, also grew...This has had a positive impact on Singapore's exports,' said IE Singapore yesterday.
'Global semiconductor sales are expected to grow at a much faster pace than in 2009,' it added.
The June numbers have rounded out the second quarter, which had overall export growth of 28per cent over the same three months last year.
Such robust numbers have led to a rethink on Singapore's growth prospects.
The Government, citing the stronger-than-expected trade expansion in the second quarter, buoyant demand from Asia and a continued boom in the semiconductor industry, has revised its forecast for non-oil domestic exports growth this year to 17 to 19 per cent, up from a 15 to 17 per cent prediction.
Total trade growth this year has also been revised upwards from between 14 and 16 per cent to 17 to 19 per cent.
But economists warn that export momentum appears to have reached a peak and is due for a slowdown in the second half of the year.
Month-on-month seasonally adjusted figures have decreased marginally for the second straight month, while the pace of growth in electronics has also slowed.
Non-oil domestic exports last month fell 0.1 per cent from May, following a 0.2 per cent fall in May from April.
Electronics shipments last month grew 1.7 per cent from May, compared to a 13.7 per cent jump from April to May.
'Easing momentum was also seen in other trade components, such as non-oil re-exports and non-oil retained imports of intermediate goods,' said Citigroup economist Kit Wei Zheng.
HSBC economist Frederic Neumann said that since Singapore is coming from a very high export level, a 'cool-down does not in itself imply a hard landing'.
Some economists also expect lingering debt problems in Europe to gather pace over the rest of the year.
The Ministry of Trade and Industry said that fiscal austerity measures in some European economies and the weakening of the euro could further weaken domestic demand in Europe.
----------------------------------------------
BENEFITS FROM CHINA
'China's trading partners are expected to benefit from the strong performance of Chinese imports. Imports of our major Asian trading partners...also grew. This has had a positive impact on Singapore's exports.'
IE Singapore
Source: Straits Times, 15 Jul 2010
Higher growth but not higher wages yet
Many companies retained workers during recession and need not ramp up hiring now that demand has picked up
THE economy may be booming at a record pace and trade figures are through the roof but workers are still waiting for the effects to be felt in the form of fatter pay packets.
Employers and unionists believe the rapidly improving climate will eventually trickle down to the shopfloor, but not just yet.
Wage rises this year are tipped to be under 5 per cent, despite stellar economic growth of between 13 and 15 per cent.
Sakae Holdings chief executive Douglas Foo said that while there has been high gross domestic product growth, 'some retailers are still not feeling that the whole thing has come to the ground level yet'.
'We are looking at wage increases, but it depends on how competitive the labour market is, and it will be tied in with productivity measures.'
It seems to be largely a problem of supply. Many companies held on to workers during the recession thanks to schemes such as Jobs Credit, so they have not needed to ramp up hiring to meet demand.
'Just as the recession didn't really harm the average Joe, neither is the rebound from the recession helping him,' said economist Manu Bhaskaran, of Centennial Asia Advisors.
UniSIM labour economist Randolph Tan does not believe the 13 to 15 per cent economic growth expected this year will be reflected in wage increases.
Mr Tan said the surge in manufacturing has served to take up the slack of excesses in production and manpower capacity, so wage levels might rise only 3 to 5 per cent this year.
National Trades Union Congress deputy secretary-general Halimah Yacob has picked up the same signals, telling The Straits Times that wage increases of between 3 and 4 per cent are being anticipated in talks going on now with employers and unions in the electronics industry.
Mr Bhaskaran said that the economic growth has been concentrated in capital-intensive manufacturing segments like pharmaceuticals, which do not generally employ many Singaporeans.
The pharmaceutical industry contributes the highest value-added to manufacturing, but employs less than 5,000 workers compared with 76,000 in electronics, or 19 per cent of the manufacturing force.
There are also many multinational companies with a very high foreign share of profits, so 'it's not surprising that the portion of growth that boosts the well-being of ordinary folks may not be high', said Mr Bhaskaran.
Right now, workers in the electronics sector seem to be benefiting the most.
There have been negotiations this month between unions and electronics firms for wage increases, said Mr Francis Lim, president of the United Workers of Electronic and Electrical Industries.
The trickle-down effect may be more muted in services, which make up 65 per cent of the economy. This sector grew 11.4 per cent in the second quarter from the same period a year ago.
While the opening of the two integrated resorts has boosted tourism and retail sales, it has also made it harder to find workers, so companies are making do with what they have.
But while the cash is not flowing into pay packets as fast as workers would like, union leaders and industry chiefs say it is only a matter of time. 'It looks promising,' said NTUC's Madam Halimah. As the economy grows stronger, there will be more jobs chasing workers, she added.
'So there will be better opportunities for them. We do expect the gains to be shared with the workers, otherwise the companies won't be able to retain the workers.'
Mr Phillip Overmyer, chief executive of the Singapore International Chamber of Commerce, said: 'Generally, when we have good, strong years, we have good, strong bonuses at the end of the year.'
Source: Straits Times, 15 Jul 2010
THE economy may be booming at a record pace and trade figures are through the roof but workers are still waiting for the effects to be felt in the form of fatter pay packets.
Employers and unionists believe the rapidly improving climate will eventually trickle down to the shopfloor, but not just yet.
Wage rises this year are tipped to be under 5 per cent, despite stellar economic growth of between 13 and 15 per cent.
Sakae Holdings chief executive Douglas Foo said that while there has been high gross domestic product growth, 'some retailers are still not feeling that the whole thing has come to the ground level yet'.
'We are looking at wage increases, but it depends on how competitive the labour market is, and it will be tied in with productivity measures.'
It seems to be largely a problem of supply. Many companies held on to workers during the recession thanks to schemes such as Jobs Credit, so they have not needed to ramp up hiring to meet demand.
'Just as the recession didn't really harm the average Joe, neither is the rebound from the recession helping him,' said economist Manu Bhaskaran, of Centennial Asia Advisors.
UniSIM labour economist Randolph Tan does not believe the 13 to 15 per cent economic growth expected this year will be reflected in wage increases.
Mr Tan said the surge in manufacturing has served to take up the slack of excesses in production and manpower capacity, so wage levels might rise only 3 to 5 per cent this year.
National Trades Union Congress deputy secretary-general Halimah Yacob has picked up the same signals, telling The Straits Times that wage increases of between 3 and 4 per cent are being anticipated in talks going on now with employers and unions in the electronics industry.
Mr Bhaskaran said that the economic growth has been concentrated in capital-intensive manufacturing segments like pharmaceuticals, which do not generally employ many Singaporeans.
The pharmaceutical industry contributes the highest value-added to manufacturing, but employs less than 5,000 workers compared with 76,000 in electronics, or 19 per cent of the manufacturing force.
There are also many multinational companies with a very high foreign share of profits, so 'it's not surprising that the portion of growth that boosts the well-being of ordinary folks may not be high', said Mr Bhaskaran.
Right now, workers in the electronics sector seem to be benefiting the most.
There have been negotiations this month between unions and electronics firms for wage increases, said Mr Francis Lim, president of the United Workers of Electronic and Electrical Industries.
The trickle-down effect may be more muted in services, which make up 65 per cent of the economy. This sector grew 11.4 per cent in the second quarter from the same period a year ago.
While the opening of the two integrated resorts has boosted tourism and retail sales, it has also made it harder to find workers, so companies are making do with what they have.
But while the cash is not flowing into pay packets as fast as workers would like, union leaders and industry chiefs say it is only a matter of time. 'It looks promising,' said NTUC's Madam Halimah. As the economy grows stronger, there will be more jobs chasing workers, she added.
'So there will be better opportunities for them. We do expect the gains to be shared with the workers, otherwise the companies won't be able to retain the workers.'
Mr Phillip Overmyer, chief executive of the Singapore International Chamber of Commerce, said: 'Generally, when we have good, strong years, we have good, strong bonuses at the end of the year.'
Source: Straits Times, 15 Jul 2010
Trade, exports may grow 17-19% this year
June NODX rose 29 per cent y-o-y, electronic exports jumped sharply
(SINGAPORE) Better than expected Q2 trade figures have led Singapore to raise this year's forecasts for both total trade and non-oil domestic exports (NODX) growth to between 17 and 19 per cent.
Buoyant trade growth from Asian economies in the first half and Gartner's upgraded forecast for global semiconductor sales are other reasons for the upgrades, trade agency International Enterprise Singapore said yesterday.
Previous forecasts for both NODX and total trade growth in 2010 were 15-17 per cent and 14-16 per cent respectively. These upgrades accompanied news of a sharp upward revision to the official GDP forecast, and strong trade numbers for June.
NODX grew 29 per cent year-on-year last month, regaining its pace after growth slowed to 24 per cent in May from April's 30 per cent surge.
Singapore's NODX in Q2 thus grew a larger than expected 28 per cent year-on-year.
Higher domestic exports of integrated circuits, IC parts and computer parts led to the 44 per cent jump in electronic NODX last month, up from May's 39 per cent increase.
And the rebound in pharmaceutical exports, as well as increased shipments of petrochemicals and machinery exports, pushed non-electronic NODX 21 per cent higher, after May's 16 per cent rise.
In sequential terms, however, exports eased for a second straight month in June. After seasonal adjustments, last month's NODX fell a marginal 0.1 per cent month-on-month, after a 0.2 per cent fall in May.
Economists say this mirrors a regional moderation in the pace of trade growth and the dissipation of low-base effects, and does not affect the strong trade outlook for the year.
HSBC's Frederic Neumann noted that Korea and Taiwan's overall shipments cooled markedly in June, while China's export data (which usually lags other Asian exporters) is expected to slow in the third quarter too.
And while the easing is an indication of softer trade flows ahead, it could also reflect typical mid-year quiet before the large shipping cycle ahead of Christmas begins, Barclays Capital economist Leong Wai Ho said.
Domestic exports to all of Singapore's top ten NODX markets grew in June, but Europe was the top contributor to NODX expansion.
NODX to the European Union jumped 75 per cent in June, from a pullback to 5.7 per cent growth in May, affirming what most economists have said about the limited impact of Europe's debt woes and austerity measures on Singapore's exports.
'Singapore's trade with Europe is fairly defensive in that a lot of it is intra-industry in nature, for example pharmaceutical and electronics trade, which is not so easily disrupted,' said Mr Leong.
Electronic exports to EU jumped 88 per cent while pharmaceutical exports to the region more than doubled.
Other top contributors in June were Japan and China, which saw shipments jump 50 per cent and 39 per cent respectively, though these were smaller than May's gains.
But NODX to the US stayed flat, as growth in electronic exports was offset by a fall in exports of ships and boats, and medical and electrical circuit apparatus.
Source: Business Times, 15 Jul 2010
(SINGAPORE) Better than expected Q2 trade figures have led Singapore to raise this year's forecasts for both total trade and non-oil domestic exports (NODX) growth to between 17 and 19 per cent.
Buoyant trade growth from Asian economies in the first half and Gartner's upgraded forecast for global semiconductor sales are other reasons for the upgrades, trade agency International Enterprise Singapore said yesterday.
Previous forecasts for both NODX and total trade growth in 2010 were 15-17 per cent and 14-16 per cent respectively. These upgrades accompanied news of a sharp upward revision to the official GDP forecast, and strong trade numbers for June.
NODX grew 29 per cent year-on-year last month, regaining its pace after growth slowed to 24 per cent in May from April's 30 per cent surge.
Singapore's NODX in Q2 thus grew a larger than expected 28 per cent year-on-year.
Higher domestic exports of integrated circuits, IC parts and computer parts led to the 44 per cent jump in electronic NODX last month, up from May's 39 per cent increase.
And the rebound in pharmaceutical exports, as well as increased shipments of petrochemicals and machinery exports, pushed non-electronic NODX 21 per cent higher, after May's 16 per cent rise.
In sequential terms, however, exports eased for a second straight month in June. After seasonal adjustments, last month's NODX fell a marginal 0.1 per cent month-on-month, after a 0.2 per cent fall in May.
Economists say this mirrors a regional moderation in the pace of trade growth and the dissipation of low-base effects, and does not affect the strong trade outlook for the year.
HSBC's Frederic Neumann noted that Korea and Taiwan's overall shipments cooled markedly in June, while China's export data (which usually lags other Asian exporters) is expected to slow in the third quarter too.
And while the easing is an indication of softer trade flows ahead, it could also reflect typical mid-year quiet before the large shipping cycle ahead of Christmas begins, Barclays Capital economist Leong Wai Ho said.
Domestic exports to all of Singapore's top ten NODX markets grew in June, but Europe was the top contributor to NODX expansion.
NODX to the European Union jumped 75 per cent in June, from a pullback to 5.7 per cent growth in May, affirming what most economists have said about the limited impact of Europe's debt woes and austerity measures on Singapore's exports.
'Singapore's trade with Europe is fairly defensive in that a lot of it is intra-industry in nature, for example pharmaceutical and electronics trade, which is not so easily disrupted,' said Mr Leong.
Electronic exports to EU jumped 88 per cent while pharmaceutical exports to the region more than doubled.
Other top contributors in June were Japan and China, which saw shipments jump 50 per cent and 39 per cent respectively, though these were smaller than May's gains.
But NODX to the US stayed flat, as growth in electronic exports was offset by a fall in exports of ships and boats, and medical and electrical circuit apparatus.
Source: Business Times, 15 Jul 2010
100,000 foreign workers needed: PM
MORE than 100,000 foreigners are set to enter Singapore's workforce this year, an increase fuelled by the record growth the Government is forecasting for the economy this year.
Prime Minister Lee Hsien Loong, in projecting the bigger inflow yesterday, said it was unavoidable as the labour market was bursting at the seams.
'If we don't allow the foreign workers in, you are going to have overheating,' he told Singapore reporters at the end of his six-day official visit to the United States.
However, he assured Singaporeans that the Government is managing the number, saying the foreign worker levies have been calibrated to moderate the inflow.
But Mr Lee added: 'Even with that, I'd imagine there will be more than 100,000 extra foreign workers this year.
'I cannot see it otherwise. But we have to accept that.'
Higher levy rates and a tiered system that makes it increasingly costly to employ many lower- and semi-skilled foreign workers were announced in February.
But they came into effect only at the start of this month to give employers time to adjust and to invest in improving productivity, which is Singapore's new catalyst for growth.
The projected inflow is, however, a slowdown when compared to the surge in 2007 (144,500) and 2008 (157,000), said economists and employers interviewed.
In fact, the pool shrank by 4,200 in the downturn last year, reducing the total foreign population to about one million.
Said economist Leong Wai Ho, of Barclays Capital investment bank, who did not think the new inflow is excessive: 'The addition of 100,000 probably reflects more discriminate and careful use of foreign workers, now that the levies have gone up.'
Mr Lee's comments coincided with the Ministry of Trade and Industry's announcement yesterday of first-half growth heading for a new peak.
It led the ministry to raise its growth forecast for Singapore this year, saying it will be 13 to 15 per cent instead of its earlier projection of 7 to 9 per cent.
The need for more foreign workers this year was implied by PM Lee at the May Day Rally, when he said that given the projected strong growth, 'a higher inflow of foreign workers is unavoidable'.
Economists like Mr Leong see many of them flowing into the hotel plus food and beverage sectors, as well as high-end industries such as electronics and marine, where demand for semi-skilled S-pass holders is high.
The hospitality sector is particularly hungry for workers, following the opening of the two integrated resorts and a surge in the number of tourists landing on Singapore shores.
Said Hotel Rendezvous general manager Kellvin Ong: 'Once we hit the quota, it's very hard to hire more. The Government has to make it more competitive for us to hire foreign workers when we need to.'
About 10 per cent of its 140 employees are foreigners, and like others in the hospitality industry, it struggles to get locals to work in lower-skilled jobs such as waiters and chambermaids.
But most employers cheered PM Lee's comments, saying it would ease the pressure, especially for small and medium-sized enterprises in sectors struggling to attract Singaporeans.
On top of that, they face a rising wage bill, with the rise in foreign worker levies and the impending one percentage point increase in employers' contribution rate to the Central Provident Fund.
Said Mr Teo Siong Seng, president of the Singapore Chinese Chamber of Commerce and Industry, which has some 4,000 members: 'We support the government policies to cut reliance on foreign workers and push for productivity, but in some sectors, it will take time to see results.
'A more controlled inflow of foreign workers will benefit the country.'
In February, the Government, in making a commitment to reduce the country's reliance on foreign workers, said it would limit the numbers to one-third of the total workforce, which stands at around three million.
Mr Teo, a Nominated Member of Parliament, cautioned his fellow employers to view this year's inflow as a 'temporary relief measure' and not to let up on their productivity efforts.
The need to focus on a productivity-driven economy to achieve sustainable growth for the next 10 years was also stressed by PM Lee and Manpower Minister Gan Kim Yong.
Said Mr Gan: 'In the short term, we would need to tap on more foreign workers to support economic growth.'
But it has to be done 'while maintaining the longer-term goal of reducing over-reliance on foreign workers through investments in productivity', he added.
Labour MP Josephine Teo said the huge foreign inflow was not a surprise to unionists, following PM Lee's remarks in his May Day Rally speech.
'In the short term, we may have to accept opening our doors a little bit more,' she said, adding that workers in companies facing a shortage may find the increase in foreign workers 'a welcome relief'.
In the meantime, the labour movement will redouble its efforts to improve productivity, she added.
Source: Straits Times, 15 Jul 2010
Prime Minister Lee Hsien Loong, in projecting the bigger inflow yesterday, said it was unavoidable as the labour market was bursting at the seams.
'If we don't allow the foreign workers in, you are going to have overheating,' he told Singapore reporters at the end of his six-day official visit to the United States.
However, he assured Singaporeans that the Government is managing the number, saying the foreign worker levies have been calibrated to moderate the inflow.
But Mr Lee added: 'Even with that, I'd imagine there will be more than 100,000 extra foreign workers this year.
'I cannot see it otherwise. But we have to accept that.'
Higher levy rates and a tiered system that makes it increasingly costly to employ many lower- and semi-skilled foreign workers were announced in February.
But they came into effect only at the start of this month to give employers time to adjust and to invest in improving productivity, which is Singapore's new catalyst for growth.
The projected inflow is, however, a slowdown when compared to the surge in 2007 (144,500) and 2008 (157,000), said economists and employers interviewed.
In fact, the pool shrank by 4,200 in the downturn last year, reducing the total foreign population to about one million.
Said economist Leong Wai Ho, of Barclays Capital investment bank, who did not think the new inflow is excessive: 'The addition of 100,000 probably reflects more discriminate and careful use of foreign workers, now that the levies have gone up.'
Mr Lee's comments coincided with the Ministry of Trade and Industry's announcement yesterday of first-half growth heading for a new peak.
It led the ministry to raise its growth forecast for Singapore this year, saying it will be 13 to 15 per cent instead of its earlier projection of 7 to 9 per cent.
The need for more foreign workers this year was implied by PM Lee at the May Day Rally, when he said that given the projected strong growth, 'a higher inflow of foreign workers is unavoidable'.
Economists like Mr Leong see many of them flowing into the hotel plus food and beverage sectors, as well as high-end industries such as electronics and marine, where demand for semi-skilled S-pass holders is high.
The hospitality sector is particularly hungry for workers, following the opening of the two integrated resorts and a surge in the number of tourists landing on Singapore shores.
Said Hotel Rendezvous general manager Kellvin Ong: 'Once we hit the quota, it's very hard to hire more. The Government has to make it more competitive for us to hire foreign workers when we need to.'
About 10 per cent of its 140 employees are foreigners, and like others in the hospitality industry, it struggles to get locals to work in lower-skilled jobs such as waiters and chambermaids.
But most employers cheered PM Lee's comments, saying it would ease the pressure, especially for small and medium-sized enterprises in sectors struggling to attract Singaporeans.
On top of that, they face a rising wage bill, with the rise in foreign worker levies and the impending one percentage point increase in employers' contribution rate to the Central Provident Fund.
Said Mr Teo Siong Seng, president of the Singapore Chinese Chamber of Commerce and Industry, which has some 4,000 members: 'We support the government policies to cut reliance on foreign workers and push for productivity, but in some sectors, it will take time to see results.
'A more controlled inflow of foreign workers will benefit the country.'
In February, the Government, in making a commitment to reduce the country's reliance on foreign workers, said it would limit the numbers to one-third of the total workforce, which stands at around three million.
Mr Teo, a Nominated Member of Parliament, cautioned his fellow employers to view this year's inflow as a 'temporary relief measure' and not to let up on their productivity efforts.
The need to focus on a productivity-driven economy to achieve sustainable growth for the next 10 years was also stressed by PM Lee and Manpower Minister Gan Kim Yong.
Said Mr Gan: 'In the short term, we would need to tap on more foreign workers to support economic growth.'
But it has to be done 'while maintaining the longer-term goal of reducing over-reliance on foreign workers through investments in productivity', he added.
Labour MP Josephine Teo said the huge foreign inflow was not a surprise to unionists, following PM Lee's remarks in his May Day Rally speech.
'In the short term, we may have to accept opening our doors a little bit more,' she said, adding that workers in companies facing a shortage may find the increase in foreign workers 'a welcome relief'.
In the meantime, the labour movement will redouble its efforts to improve productivity, she added.
Source: Straits Times, 15 Jul 2010
Foreign worker inflow to top 100k this year
PM Lee says economy will overheat if more foreign workers not let in
Lee Hsien Loong sees the inflow of at least another 100,000 foreign workers into the country.
And this despite the government's efforts to manage the flow with finer calibrations of the foreign worker levy, he told Singapore reporters at the end of a working trip to the United States.
'Even with that, I imagine there will be more than 100,000 extra foreign workers this year,' Mr Lee said. 'I can't see it otherwise, but we have to accept it.'
He said it can't be helped because the labour market is already very tight - and without letting in more foreign workers, the economy will overheat.
While Singapore should be happy about its sterling economic performance this year, Mr Lee said it must also guard against the expectations that it can continue to repeat the performance effortlessly year after year.
Instead, he said Singapore must make the most of its good fortunes now to restructure the economy, upgrade workers' skills and improve overall productivity.
'Unless we make these structured changes, we will not be able to sustain growth,' Mr Lee said.
And he doesn't mean yearly growth of 9-10 per cent, but 3-5 per cent. '(If we achieve that), we will be doing well,' Mr Lee said.
He said the high economic growth attained so far this year partly reflected a rebound from last year's downturn. It's also partly due to new projects that have come on stream - in particular the two integrated resorts that have made a big difference in boosting tourism.
Mr Lee sees the sharp spike in pharmaceutical outputs, which have also made a big contribution to economic growth this year, to peter out in the coming months.
Government stimulus, especially the Jobs Credit Scheme, which has just expired, were not much help this year, because the economy is already in full employment, according to him.
'I don't see the labour market slackening this year,' Mr Lee said. 'We are very tight and we need more workers. So it's right we have withdrawn the stimulus.'
Singapore's economic growth beyond 'the immediate rebound' will depend more on the region - especially the growth in China and India - the global economy and how far and fast Singapore has moved in economic restructuring, he predicted.
Mr Lee said the government, which has taken steps to cool the heated property market recently, would continue to keep an eye on it. And it would introduce more measures if necessary.
When asked, Mr Lee also said he has not decided when to call for the next general election which is due in 2012. 'It's too early to say,' he said.
Mr Lee and his delegation are due back today.
Source: Business Times, 15 Jul 2010
Lee Hsien Loong sees the inflow of at least another 100,000 foreign workers into the country.
And this despite the government's efforts to manage the flow with finer calibrations of the foreign worker levy, he told Singapore reporters at the end of a working trip to the United States.
'Even with that, I imagine there will be more than 100,000 extra foreign workers this year,' Mr Lee said. 'I can't see it otherwise, but we have to accept it.'
He said it can't be helped because the labour market is already very tight - and without letting in more foreign workers, the economy will overheat.
While Singapore should be happy about its sterling economic performance this year, Mr Lee said it must also guard against the expectations that it can continue to repeat the performance effortlessly year after year.
Instead, he said Singapore must make the most of its good fortunes now to restructure the economy, upgrade workers' skills and improve overall productivity.
'Unless we make these structured changes, we will not be able to sustain growth,' Mr Lee said.
And he doesn't mean yearly growth of 9-10 per cent, but 3-5 per cent. '(If we achieve that), we will be doing well,' Mr Lee said.
He said the high economic growth attained so far this year partly reflected a rebound from last year's downturn. It's also partly due to new projects that have come on stream - in particular the two integrated resorts that have made a big difference in boosting tourism.
Mr Lee sees the sharp spike in pharmaceutical outputs, which have also made a big contribution to economic growth this year, to peter out in the coming months.
Government stimulus, especially the Jobs Credit Scheme, which has just expired, were not much help this year, because the economy is already in full employment, according to him.
'I don't see the labour market slackening this year,' Mr Lee said. 'We are very tight and we need more workers. So it's right we have withdrawn the stimulus.'
Singapore's economic growth beyond 'the immediate rebound' will depend more on the region - especially the growth in China and India - the global economy and how far and fast Singapore has moved in economic restructuring, he predicted.
Mr Lee said the government, which has taken steps to cool the heated property market recently, would continue to keep an eye on it. And it would introduce more measures if necessary.
When asked, Mr Lee also said he has not decided when to call for the next general election which is due in 2012. 'It's too early to say,' he said.
Mr Lee and his delegation are due back today.
Source: Business Times, 15 Jul 2010
S'pore's first-half growth leaves forecasters gasping
13-15% projected growth this year could place S'pore among world's fastest-growing economies
(SINGAPORE) With a sizzling 18 per cent first-half pace in the bag, Singapore is on track to post a near 40-year high economic growth this year, if not its highest ever.
The Ministry of Trade and Industry yesterday bumped up the official forecast of Singapore's 2010 GDP growth by an unprecedented six points to 13-15 per cent - a range that should place it fastest-growing among, as one economist put it, 'normal functioning economies' worldwide.
The last time that Singapore's full-year growth crossed 13 per cent was in 1972 when the economy grew 13.5 per cent - which is not far from the all-time high of 13.8 per cent in 1970.
Caught a little short by the 'stunningly strong' GDP figures released yesterday - revised Q1 growth of 16.9 per cent and a record 19.3 per cent Q2 surge - private sector economists scurried to play catch-up.
Most revised their recently-upgraded forecasts yesterday, with at least three estimates now above the official projection.
Still, MTI made it clear that the first half's 'exceptionally strong growth' is unlikely to be sustained into the second half, with a 'more subdued outlook' up ahead.
The Q2 figures unveiled yesterday are flash estimates based only on April and May data, and already the first June indicators in hand - key non-oil domestic exports - show a second straight month of sequential easing.
Indeed, the official 13-15 per cent GDP growth forecast would imply a sharp slowdown in the sequential pace - measured in quarter-on-quarter terms - in the second half, with perhaps one negative quarter, even if the year-on-year rates remain 'healthy'.
As one bank's economists note, if GDP growth turns out flat on a sequential basis for Q3 and Q4, full year growth will still cross 17 per cent. Most economists expect growth in the second half of the year, in on-year terms, to ease to around 10-15 per cent.
Commenting on Singapore's economic performance, Prime Minister Lee Hsien Loong said that the stellar growth this year will likely lead to the influx of at least another 100,000 foreign workers into the country. Speaking to Singapore reporters at the end of a working trip to the United States, he cautioned, however, against expecting such robust growth figures for the rest of the year - or the years ahead.
In a longer than usual statement with the advance estimates, MTI notes that the momentum of the global economic recovery has slowed of late, 'although a double-dip recession remains unlikely at this juncture'.
Sluggish demand in America and Europe - with emerging signs of slowdown in the US labour markets and as concerns over the EU's sovereign debt crisis persist - has dampened expectations for industrial output across Asia, it says.
As well, industry-specific factors here such as plant maintenance shutdowns in the biomedical manufacturing cluster will drag down growth, MTI adds.
The biomedical sector - specifically pharmaceuticals - was, of course, the key driver behind the phenomenal manufacturing growth in Q1 and Q2. MTI attributed the marked 1.4-point upgrade in Q1's GDP growth, from an earlier estimate of 15.5 per cent, to the biomedical cluster.
Q2 growth was fairly broad-based, with boosts as well from not only global electronics demand and trade flows but also strong domestic bank lending and foreign exchange trading and, not least, higher visitor arrivals, with the opening of the integrated resorts, MTI said.
Citigroup economist Kit Wei Zheng - who was probably the first, back in end-May, to signal the prospects of double-digit growth this year - says that his latest 15.5 per cent GDP growth forecast assumes an 11 per cent technical pullback in Q3 and 'broadly flat' growth in Q4.
But if the sequential pace stays positive in Q3, the positive output gap and inflationary pressures could well lead to further monetary tightening in October, he says.
And while Mr Kit is upbeat about this year, the high base of the first half will set 'a high hurdle' for growth in the first half of 2011, 'which leads us to fine-tune our 2011 forecast to 4.6 per cent, down from 5 per cent previously', he says.
While some economists reckon Singapore's robust above-trend economic growth will put pressure on inflation and wages, others note that the economy is in 'a sweet spot', enjoying strong growth and benign inflation.
But, says OCBC Bank's Selena Ling: 'The tide could change quite quickly given the swirling global under-currents of debt and fiscal consolidation, and lingering banking sector stresses in the developed economies.'
Rather more upbeat, PK Basu from Daiwa Capital Markets declares that Singapore - along with South Korea and Taiwan - will benefit 'hugely' from the massive IT rebound underway that's driven by a strong replacement cycle for PCs.
Source: Business Times, 15 Jul 2010
(SINGAPORE) With a sizzling 18 per cent first-half pace in the bag, Singapore is on track to post a near 40-year high economic growth this year, if not its highest ever.
The Ministry of Trade and Industry yesterday bumped up the official forecast of Singapore's 2010 GDP growth by an unprecedented six points to 13-15 per cent - a range that should place it fastest-growing among, as one economist put it, 'normal functioning economies' worldwide.
The last time that Singapore's full-year growth crossed 13 per cent was in 1972 when the economy grew 13.5 per cent - which is not far from the all-time high of 13.8 per cent in 1970.
Caught a little short by the 'stunningly strong' GDP figures released yesterday - revised Q1 growth of 16.9 per cent and a record 19.3 per cent Q2 surge - private sector economists scurried to play catch-up.
Most revised their recently-upgraded forecasts yesterday, with at least three estimates now above the official projection.
Still, MTI made it clear that the first half's 'exceptionally strong growth' is unlikely to be sustained into the second half, with a 'more subdued outlook' up ahead.
The Q2 figures unveiled yesterday are flash estimates based only on April and May data, and already the first June indicators in hand - key non-oil domestic exports - show a second straight month of sequential easing.
Indeed, the official 13-15 per cent GDP growth forecast would imply a sharp slowdown in the sequential pace - measured in quarter-on-quarter terms - in the second half, with perhaps one negative quarter, even if the year-on-year rates remain 'healthy'.
As one bank's economists note, if GDP growth turns out flat on a sequential basis for Q3 and Q4, full year growth will still cross 17 per cent. Most economists expect growth in the second half of the year, in on-year terms, to ease to around 10-15 per cent.
Commenting on Singapore's economic performance, Prime Minister Lee Hsien Loong said that the stellar growth this year will likely lead to the influx of at least another 100,000 foreign workers into the country. Speaking to Singapore reporters at the end of a working trip to the United States, he cautioned, however, against expecting such robust growth figures for the rest of the year - or the years ahead.
In a longer than usual statement with the advance estimates, MTI notes that the momentum of the global economic recovery has slowed of late, 'although a double-dip recession remains unlikely at this juncture'.
Sluggish demand in America and Europe - with emerging signs of slowdown in the US labour markets and as concerns over the EU's sovereign debt crisis persist - has dampened expectations for industrial output across Asia, it says.
As well, industry-specific factors here such as plant maintenance shutdowns in the biomedical manufacturing cluster will drag down growth, MTI adds.
The biomedical sector - specifically pharmaceuticals - was, of course, the key driver behind the phenomenal manufacturing growth in Q1 and Q2. MTI attributed the marked 1.4-point upgrade in Q1's GDP growth, from an earlier estimate of 15.5 per cent, to the biomedical cluster.
Q2 growth was fairly broad-based, with boosts as well from not only global electronics demand and trade flows but also strong domestic bank lending and foreign exchange trading and, not least, higher visitor arrivals, with the opening of the integrated resorts, MTI said.
Citigroup economist Kit Wei Zheng - who was probably the first, back in end-May, to signal the prospects of double-digit growth this year - says that his latest 15.5 per cent GDP growth forecast assumes an 11 per cent technical pullback in Q3 and 'broadly flat' growth in Q4.
But if the sequential pace stays positive in Q3, the positive output gap and inflationary pressures could well lead to further monetary tightening in October, he says.
And while Mr Kit is upbeat about this year, the high base of the first half will set 'a high hurdle' for growth in the first half of 2011, 'which leads us to fine-tune our 2011 forecast to 4.6 per cent, down from 5 per cent previously', he says.
While some economists reckon Singapore's robust above-trend economic growth will put pressure on inflation and wages, others note that the economy is in 'a sweet spot', enjoying strong growth and benign inflation.
But, says OCBC Bank's Selena Ling: 'The tide could change quite quickly given the swirling global under-currents of debt and fiscal consolidation, and lingering banking sector stresses in the developed economies.'
Rather more upbeat, PK Basu from Daiwa Capital Markets declares that Singapore - along with South Korea and Taiwan - will benefit 'hugely' from the massive IT rebound underway that's driven by a strong replacement cycle for PCs.
Source: Business Times, 15 Jul 2010
Economy set to grow 13%-15%
Govt doubles full-year forecast after record expansion in first half
SINGAPORE'S economy is on its way to chalking up two records this year: the highest growth in the country's history and the quickest rebound in Asia.
The Government yesterday nearly doubled its 2010 growth forecast in its third upgrade this year, after the economy surged at an unprecedented 18 per cent sprint in the first half.
With guns blazing from all three key sectors of manufacturing, services and construction, the Ministry of Trade and Industry (MTI) now expects the economy to grow between 13 per cent and 15 per cent for the full year, up from its previous tip of 7 per cent to 9 per cent.
This brings growth this year squarely within reach of the last all-time high of 13.8 per cent in 1970 and surpasses most economists' projections.
It also puts Singapore ahead of the pack as the fastest-growing economy in Asia - and possibly the world - this year, beating powerhouses China and India.
Commenting on the growth numbers, Prime Minister Lee Hsien Loong told reporters accompanying him on a trip to the United States: 'It's a good result and we should be happy.
'But at the same time we should understand that it doesn't mean that next year we are going to get this and the year after that we are going to get this. This is a rebound.'
He also cautioned against comparing Singapore's performance with that of other economies. 'Maybe numerically, the growth figure may be higher than other countries, but I would hesitate to compare myself with China. I think if you compare yourself with Shanghai, they may well be ahead of us,' he said.
He attributed the massive growth numbers partly to the rebound from last year's downturn, and partly to new projects such as the integrated resorts. He also said the pharmaceutical industry has seen 'a very sharp increase in output this year compared to last year which I do not think will continue even into the next few months. So that part will probably tail off soon.'
The news of Singapore's sparkling performance prompted CIMB-GK economist Song Seng Wun to say: 'The fastest-growing economies this year will all be in Asia, led by Singapore. This growth rate is more typical of small emerging African countries than developed Singapore.' He credited the schemes that the Government rushed out to support businesses and employees in the recession, allowing them to bounce back quickly.
Even as MTI revealed record growth rates in the first two quarters of this year, it said the new forecast also factors in an expected slowdown in growth for the rest of the year.
Singapore grew by a tremendous 19.3 per cent in the second quarter over the same period last year, eclipsing the record set in the first quarter. First-quarter growth itself was revised upwards yesterday to 16.9 per cent, more than the 15.5 per cent estimated three months ago, on the back of stronger-than-expected biomedical output.
Growth in the second quarter was broad-based, with manufacturing, services and construction all logging double-digit expansions over a year ago.
The manufacturing sector outperformed the rest with a 45.5 per cent surge in output, but construction was the big surprise with a solid 13.5 per cent rise.
However, the growth momentum appears to be slowing. The economy grew an estimated 26 per cent between March and last month, on a quarter-on-quarter basis - a stellar performance, but down from a revised 45.9 per cent between December and March.
'Although the global economy remains on a recovery path, the pace of growth has slowed,' the MTI said, pointing to sluggish domestic demand in the United States and Europe.
'The exceptionally strong growth experienced by the Singapore economy in the first half of 2010 is therefore not likely to be sustained into the second half of the year.' The MTI also said growth will be dragged down by industry-specific factors such as maintenance shutdowns of biomedical plants.
On the latest spurt, PM Lee said: 'Now we must make the most of this opportunity to implement the restructuring, the upgrading, the productivity improvement which we have been pursuing and talked about in the Budget. Because unless you get these longer-term structural changes, we are not going to be able to sustain growth in the future years. And when we say sustained growth, we don't mean 9, 10 or 11 per cent growth in future years, but 3, 4, 5 steadily for another 10 years, I think we are doing well.'
The upgraded annual forecast implies 8 to 12 per cent growth for the second half of the year. While this marks a slowdown, it is still healthy, economists said. Several of them had already raised their 2010 growth forecasts to double digits before yesterday's announcement, but went on to upgrade them further. UOB economist Chow Penn Nee hiked her forecast by almost five points to 13.8 per cent. Barclays Capital economist Leong Wai Ho raised his from 12 per cent to 14.5 per cent.
Citigroup economist Kit Wei Zheng, one of the first to tip double-digit growth, bumped up his growth projection to 15 per cent from 12.5 per cent. But he added that this year's high base means next year's growth may come in lower, and adjusted his 2011 forecast downwards to 4.6 per cent accordingly.
Source: Straits Times, 15 Jul 2010
SINGAPORE'S economy is on its way to chalking up two records this year: the highest growth in the country's history and the quickest rebound in Asia.
The Government yesterday nearly doubled its 2010 growth forecast in its third upgrade this year, after the economy surged at an unprecedented 18 per cent sprint in the first half.
With guns blazing from all three key sectors of manufacturing, services and construction, the Ministry of Trade and Industry (MTI) now expects the economy to grow between 13 per cent and 15 per cent for the full year, up from its previous tip of 7 per cent to 9 per cent.
This brings growth this year squarely within reach of the last all-time high of 13.8 per cent in 1970 and surpasses most economists' projections.
It also puts Singapore ahead of the pack as the fastest-growing economy in Asia - and possibly the world - this year, beating powerhouses China and India.
Commenting on the growth numbers, Prime Minister Lee Hsien Loong told reporters accompanying him on a trip to the United States: 'It's a good result and we should be happy.
'But at the same time we should understand that it doesn't mean that next year we are going to get this and the year after that we are going to get this. This is a rebound.'
He also cautioned against comparing Singapore's performance with that of other economies. 'Maybe numerically, the growth figure may be higher than other countries, but I would hesitate to compare myself with China. I think if you compare yourself with Shanghai, they may well be ahead of us,' he said.
He attributed the massive growth numbers partly to the rebound from last year's downturn, and partly to new projects such as the integrated resorts. He also said the pharmaceutical industry has seen 'a very sharp increase in output this year compared to last year which I do not think will continue even into the next few months. So that part will probably tail off soon.'
The news of Singapore's sparkling performance prompted CIMB-GK economist Song Seng Wun to say: 'The fastest-growing economies this year will all be in Asia, led by Singapore. This growth rate is more typical of small emerging African countries than developed Singapore.' He credited the schemes that the Government rushed out to support businesses and employees in the recession, allowing them to bounce back quickly.
Even as MTI revealed record growth rates in the first two quarters of this year, it said the new forecast also factors in an expected slowdown in growth for the rest of the year.
Singapore grew by a tremendous 19.3 per cent in the second quarter over the same period last year, eclipsing the record set in the first quarter. First-quarter growth itself was revised upwards yesterday to 16.9 per cent, more than the 15.5 per cent estimated three months ago, on the back of stronger-than-expected biomedical output.
Growth in the second quarter was broad-based, with manufacturing, services and construction all logging double-digit expansions over a year ago.
The manufacturing sector outperformed the rest with a 45.5 per cent surge in output, but construction was the big surprise with a solid 13.5 per cent rise.
However, the growth momentum appears to be slowing. The economy grew an estimated 26 per cent between March and last month, on a quarter-on-quarter basis - a stellar performance, but down from a revised 45.9 per cent between December and March.
'Although the global economy remains on a recovery path, the pace of growth has slowed,' the MTI said, pointing to sluggish domestic demand in the United States and Europe.
'The exceptionally strong growth experienced by the Singapore economy in the first half of 2010 is therefore not likely to be sustained into the second half of the year.' The MTI also said growth will be dragged down by industry-specific factors such as maintenance shutdowns of biomedical plants.
On the latest spurt, PM Lee said: 'Now we must make the most of this opportunity to implement the restructuring, the upgrading, the productivity improvement which we have been pursuing and talked about in the Budget. Because unless you get these longer-term structural changes, we are not going to be able to sustain growth in the future years. And when we say sustained growth, we don't mean 9, 10 or 11 per cent growth in future years, but 3, 4, 5 steadily for another 10 years, I think we are doing well.'
The upgraded annual forecast implies 8 to 12 per cent growth for the second half of the year. While this marks a slowdown, it is still healthy, economists said. Several of them had already raised their 2010 growth forecasts to double digits before yesterday's announcement, but went on to upgrade them further. UOB economist Chow Penn Nee hiked her forecast by almost five points to 13.8 per cent. Barclays Capital economist Leong Wai Ho raised his from 12 per cent to 14.5 per cent.
Citigroup economist Kit Wei Zheng, one of the first to tip double-digit growth, bumped up his growth projection to 15 per cent from 12.5 per cent. But he added that this year's high base means next year's growth may come in lower, and adjusted his 2011 forecast downwards to 4.6 per cent accordingly.
Source: Straits Times, 15 Jul 2010
Wednesday, July 14, 2010
2010 will be record growth year for Singapore: PM Lee
Prime Minister Lee Hsien Loong, commenting on Singapore’s latest GDP growth estimates and its 2010 outlook, said the country is on a “firm path” towards a record year.
Earlier Wednesday the Ministry of Trade and Industry (MTI) upgraded Singapore’s 2010 GDP growth forecast to a blistering 13 to 15 percent, outstripping estimates for China.
The revision followed the 16.9 percent year-on-year GDP growth in the first quarter while second-quarter expansion is estimated at 19.3 percent.
Mr Lee, speaking to reporters at the end of an official visit to the US, attributed the rebound mainly to the success of the two integrated resorts and a sharp increase in pharmaceutical output.
Mr Lee also said Singapore should go into double-digit growth this year. But he tempered sentiments, saying that this is an exceptional year.
“It’s a good result and we should be happy. But at the same time we should understand that it doesn’t mean that next year you are going to get this, and the year after that you will get this. This is a rebound,” he said.
“We are on a firm path upwards. Now we must make the most of this opportunity to implement the restructuring, the upgrading, the productivity improvement which we have been pursuing and talked about in the Budget.
“Because unless you get these longer term structural changes, we are not going to be able to sustain growth in the future years. And when we say ‘sustain growth’, we don’t mean 9, 10 percent or 11 percent in future years but 3, 4, 5 percent steadily for another 10 years,” added Mr Lee.
Mr Lee was also asked about his thoughts on issues that may crop up at the next General Election due by 2012.
But he remained tight lipped.
“No, it’s just a great mystery! (laughter). I think it’s too early to say. I mean we are just midway through 2010, with a record economy. I have not decided when the election will be.”
Source: Channel News Asia, 14 Jul 2010
Earlier Wednesday the Ministry of Trade and Industry (MTI) upgraded Singapore’s 2010 GDP growth forecast to a blistering 13 to 15 percent, outstripping estimates for China.
The revision followed the 16.9 percent year-on-year GDP growth in the first quarter while second-quarter expansion is estimated at 19.3 percent.
Mr Lee, speaking to reporters at the end of an official visit to the US, attributed the rebound mainly to the success of the two integrated resorts and a sharp increase in pharmaceutical output.
Mr Lee also said Singapore should go into double-digit growth this year. But he tempered sentiments, saying that this is an exceptional year.
“It’s a good result and we should be happy. But at the same time we should understand that it doesn’t mean that next year you are going to get this, and the year after that you will get this. This is a rebound,” he said.
“We are on a firm path upwards. Now we must make the most of this opportunity to implement the restructuring, the upgrading, the productivity improvement which we have been pursuing and talked about in the Budget.
“Because unless you get these longer term structural changes, we are not going to be able to sustain growth in the future years. And when we say ‘sustain growth’, we don’t mean 9, 10 percent or 11 percent in future years but 3, 4, 5 percent steadily for another 10 years,” added Mr Lee.
Mr Lee was also asked about his thoughts on issues that may crop up at the next General Election due by 2012.
But he remained tight lipped.
“No, it’s just a great mystery! (laughter). I think it’s too early to say. I mean we are just midway through 2010, with a record economy. I have not decided when the election will be.”
Source: Channel News Asia, 14 Jul 2010
Singapore expects double-digit 2010 economic growth
The Singapore government on Wednesday upgraded its 2010 economic growth forecast to a blistering 13 to 15 per cent, outstripping estimates of around 10 per cent growth in regional powerhouse China.
Robust demand for its manufactured exports, particularly biomedical products, resulted in the sharp upgrade from the earlier estimate of 7.0 to 9.0 per cent growth in gross domestic product (GDP).
GDP growth in the first quarter was 16.9 per cent from a year ago, the Ministry of Trade and Industry (MTI) said, while second quarter expansion is estimated at 19.3 per cent.
MTI said growth would moderate in the second half of the year due to a slowdown in the US recovery and sovereign debt problems in Europe.
On an annualised and seasonally adjusted basis, Singapore economy expanded 26.0 per cent in the April-June period.
The manufacturing sector is estimated to have grown by 45.5 per cent year-on-year.
Growth was driven by a surge in the output of the biomedical manufacturing cluster, as well as a strong expansion in the electronics cluster.
Singapore also revised upwards its forecast for total trade growth this year to between 17 and 19 per cent. This compared to the previous forecast for between 14 and 16 per cent growth.
The forecast for non oil domestic exports (NODX) has also been raised to between 17 and 19 per cent, up from the previous projection of between 15 and 17 per cent.
Trade promotion agency IE Singapore said among the reasons for the upward revisions were better-than-expected second quarter trade performance.
The year-on-year expansion in both Singapore’s total trade and NODX was larger than expected for the second quarter of 2010, at 28 per cent each.
The corresponding figures for the second quarter of 2009 were declines of 27 per cent and 14 per cent.
IE Singapore said another contributory factor was strong trade growth of Asian economies.
They continued to enjoy buoyant growth in the first half of 2010, with the International Monetary Fund upgrading Asia’s 2010 real GDP growth forecast to 7.5 per cent, up from April’s forecast of 6.9 per cent.
The agency said global semiconductor demand also grew at a much faster pace than in 2009.
IE Singapore said for the month of June, NODX rose by 29 per cent on year after the 24 per cent growth in the previous month, due to both electronic and non-electronic domestic exports.
Electronic NODX increased by 44 per cent in June on-year due to higher domestic exports of ICs, parts of ICs and PC parts.
The agency said non-electronic NODX grew by 21 per cent. The increase was led by higher domestic exports of pharmaceuticals, petrochemicals and specialised machinery.
NODX to all of the top 10 markets increased in June. The largest contributors to the increase were the European Union, China and Japan.
Source: Channel News Asia, 14 Jul 2010
Robust demand for its manufactured exports, particularly biomedical products, resulted in the sharp upgrade from the earlier estimate of 7.0 to 9.0 per cent growth in gross domestic product (GDP).
GDP growth in the first quarter was 16.9 per cent from a year ago, the Ministry of Trade and Industry (MTI) said, while second quarter expansion is estimated at 19.3 per cent.
MTI said growth would moderate in the second half of the year due to a slowdown in the US recovery and sovereign debt problems in Europe.
On an annualised and seasonally adjusted basis, Singapore economy expanded 26.0 per cent in the April-June period.
The manufacturing sector is estimated to have grown by 45.5 per cent year-on-year.
Growth was driven by a surge in the output of the biomedical manufacturing cluster, as well as a strong expansion in the electronics cluster.
Singapore also revised upwards its forecast for total trade growth this year to between 17 and 19 per cent. This compared to the previous forecast for between 14 and 16 per cent growth.
The forecast for non oil domestic exports (NODX) has also been raised to between 17 and 19 per cent, up from the previous projection of between 15 and 17 per cent.
Trade promotion agency IE Singapore said among the reasons for the upward revisions were better-than-expected second quarter trade performance.
The year-on-year expansion in both Singapore’s total trade and NODX was larger than expected for the second quarter of 2010, at 28 per cent each.
The corresponding figures for the second quarter of 2009 were declines of 27 per cent and 14 per cent.
IE Singapore said another contributory factor was strong trade growth of Asian economies.
They continued to enjoy buoyant growth in the first half of 2010, with the International Monetary Fund upgrading Asia’s 2010 real GDP growth forecast to 7.5 per cent, up from April’s forecast of 6.9 per cent.
The agency said global semiconductor demand also grew at a much faster pace than in 2009.
IE Singapore said for the month of June, NODX rose by 29 per cent on year after the 24 per cent growth in the previous month, due to both electronic and non-electronic domestic exports.
Electronic NODX increased by 44 per cent in June on-year due to higher domestic exports of ICs, parts of ICs and PC parts.
The agency said non-electronic NODX grew by 21 per cent. The increase was led by higher domestic exports of pharmaceuticals, petrochemicals and specialised machinery.
NODX to all of the top 10 markets increased in June. The largest contributors to the increase were the European Union, China and Japan.
Source: Channel News Asia, 14 Jul 2010
Singapore expected to become world’s fastest-growing economy
Singapore on Wednesday looked set to become the world’s fastest-growing economy after the government upgraded its 2010 forecast to a blistering 13 to 15 percent expansion, economists said.
The new forecast, up sharply from predicted 7.0-9.0 growth, outstrips estimates of around 10 percent growth in regional powerhouse China and came despite lingering worries over the US economy and Europe’s debt crisis.
“Singapore will be the strongest growing economy in Asia for the year and probably in the world,” said Song Seng Wun, a Singapore-based regional economist with CIMB Research.
David Cohen, a regional economist with research house Action Economics, said Singapore will “probably come on top of the charts worldwide.”
Cohen, however, said this should be seen in the context that Singapore’s economy contracted by 1.3 percent last year due to the global economic crisis, while China’s gross domestic product (GDP) grew at around 9.0 percent.
Robust demand for Singapore’s manufactured exports, particularly biomedical products, resulted in the sharp upgrade for the trade-driven island’s GDP growth forecast.
Growth in the first quarter was 16.9 percent from a year ago, the Ministry of Trade and Industry said, while second quarter expansion is estimated at 19.3 percent.
The ministry said growth would moderate in the second half of the year due to a slowdown in the US recovery and sovereign debt woes in Europe.
“Although the global economy remains on a recovery path, the pace of growth has slowed,” the ministry said.
“In the US, there are now signs of a slowdown in the labour market following the recovery earlier in the year. This has affected consumer confidence. In the EU, domestic demand remains depressed as concerns over the sovereign debt crisis persist.”
Source: Channel News Asia, 14 Jul 2010
The new forecast, up sharply from predicted 7.0-9.0 growth, outstrips estimates of around 10 percent growth in regional powerhouse China and came despite lingering worries over the US economy and Europe’s debt crisis.
“Singapore will be the strongest growing economy in Asia for the year and probably in the world,” said Song Seng Wun, a Singapore-based regional economist with CIMB Research.
David Cohen, a regional economist with research house Action Economics, said Singapore will “probably come on top of the charts worldwide.”
Cohen, however, said this should be seen in the context that Singapore’s economy contracted by 1.3 percent last year due to the global economic crisis, while China’s gross domestic product (GDP) grew at around 9.0 percent.
Robust demand for Singapore’s manufactured exports, particularly biomedical products, resulted in the sharp upgrade for the trade-driven island’s GDP growth forecast.
Growth in the first quarter was 16.9 percent from a year ago, the Ministry of Trade and Industry said, while second quarter expansion is estimated at 19.3 percent.
The ministry said growth would moderate in the second half of the year due to a slowdown in the US recovery and sovereign debt woes in Europe.
“Although the global economy remains on a recovery path, the pace of growth has slowed,” the ministry said.
“In the US, there are now signs of a slowdown in the labour market following the recovery earlier in the year. This has affected consumer confidence. In the EU, domestic demand remains depressed as concerns over the sovereign debt crisis persist.”
Source: Channel News Asia, 14 Jul 2010
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