Singapore's boom should outlast the hype

Published July 13, 2007

Singapore's boom should outlast the hype

WHEN economists say things like they reckon Singapore will remain Asia's fastest-growing economy in the years to come, 'apart from China and India', it sounds more like hype and hyperbole than sober analysis.

And that was even before Tuesday's release of sizzling second-quarter economic results. Never mind that they are early numbers, based only on April and May data, and devoid of sectorial details.

The flash estimates of Singapore's headline economic indicators - 8.2 per cent gross domestic product (GDP) growth, the fastest in five quarters, and even faster in momentum terms, as well as significant rebounds in manufacturing and construction - are evidently exciting enough to send commentators into a fair tizzy, scrambling to raise the year's growth forecasts, pronouncing the end of bad news (yes, there has been some still, recently), declaring the arrival of boom times.

The bad news, or the not-so-great news, has largely been in the manufacturing sector, specifically electronics, where the industry has been mired in a global cyclical slump since the end of 2006. For Singapore, the downturn has meant weak, if not negative, numbers in the electronics cluster, with three segments - infocomms and consumer electronics, computer peripherals, and disk drives - essentially in contraction for the first five months of the year. Once the lifeblood of not only the manufacturing sector but the entire economy, electronics still accounts for a good 29 per cent of total industrial production. And despite the poor performance, the manufacturing sector still managed to grow 4.4 per cent in the first quarter, powered virtually solely by robust activity in ship building, ship repairing, rig fabrication and aircraft maintenance.

Electronics output remained weak through April and May - but total manufacturing production staged a strong rebound, growing about 18 per cent. Apart from the transport cluster's continued strong showing, pharmaceutical plants also chipped in in Q2.

It may well be that two months, or even three, do not a trend make, but these news-bits do strike economists as significant on several fronts, not least the evidence that Singapore's efforts at restructuring and diversifying its industrial base are paying off.

And if Singapore's economic growth is less tied to the vagaries of the highly cyclical electronics industry, or at least now has other strong, stable pillars in the biomedical and financial sectors, it would, hopefully, become less volatile. In any case, expectations, too, are that the electronics industry may finally be turning around soon - for this round, anyway.

Yes, the signs spell 'Boom Town' here, with the property market on a roll, the finance sector all abuzz, the economy flush with liquidity and headed for another year of high growth. Better yet if the apparent business and consumer confidence translates to real demand and improved productivity (which is still weak), and ensure a boom that outlasts at least any hype, and the next electronics cycle.