The Ministry of Trade and Industry (MTI) announced today that the Singapore economy is expected to grow by 4 - 5 per cent in 2008.
The narrowing of the forecast range for 2008 from 4 - 6 per cent to 4 - 5 per cent "is consistent with the moderation in economic growth seen in the second quarter", according to MTI.
GDP grew by 2.1 per cent year-on-year, down from the 6.9 per cent increase in the preceding quarter. Growth on an annualised, quarter-on-quarter basis fell by 6.0 per cent, from an increase of 15.7 per cent in the first quarter.
For the first half of 2008, real GDP grew by 4.5 per cent.
Source: Ministry of Trade and Industry
What contributes to the slowdown
The lower growth in the second quarter was mainly the result of a sharp contraction in biomedical manufacturing value-added, reflecting a switch in product mix to pharmaceutical ingredients with lower values compared to a year ago.
Stagnant growth in the electronics industry also contributed to the slowdown in GDP growth.
Still strong
The services sector continued to grow at a healthy pace, albeit slightly slower than in the first quarter.
Financial services and business services also continued to register robust growth while growth in construction remained strong.
GDP in H2
GDP growth in the second half is likely to be broadly similar to the first half, according to MTI.
In its media statement, it said: "While the US economy has avoided recession to-date, the major economies are experiencing a generalised slowdown in economic activity. The weakened balance sheets of financial institutions and continued decline in housing markets are causing a drag on domestic demand in the US and the EU.
"Weaker demand in the major economies, coupled with the need to contain inflationary pressures, will dampen growth in the fast growing Asian economies."
Source: Ministry of Trade and Industry
Outlook for industries
MTI expects the electronics industry to remain soft in the second half of 2008, reflecting weak demand for semiconductors.
The short-term outlook for biomedical manufacturing will be weighed down by global trends, such as strong competition from generic drugs and delays in approvals for new pharmaceuticals.
Wholesale trade, financial services and business services are likely to remain resilient and will provide some support for overall economic growth.
