All-round strength powers economy to 8.2% growth

July 11, 2007

All-round strength powers economy to 8.2% growth

Economists hail strong showing despite woes of electronics sector

By Bryan Lee


SINGAPORE'S booming economy has thrashed all predictions with 8.2 per cent growth last quarter over the same period last year - its fastest pace in 15 months.

Economists say the Government may well lift the official growth forecast for the full year on the back of the dazzling performance.

They say the strong showing in the April 1 to June 30 quarter is all the more impressive because it came even though the electronics sector is still in the doldrums.

Until recently, electronics was the backbone of manufacturing and the economy here, especially electronics exports to the United States. Tough times at electronics factories invariably flowed through to the wider economy.

Not so now, say economists, as Singapore has succeeded in diversifying its economy to new sectors such as pharmaceuticals and other higher-end industries.

'Singapore is by no means dependent on the vagaries of the United States technology cycle,' said HSBC economist Richard Prior-Wandesforde. 'It can clearly not just survive but thrive while this sector is stuck firmly in the doldrums.

'Let the good times roll.'

No specific figure on electronics was given in the latest preliminary figures from the Ministry of Trade and Industry (MTI) released yesterday.

But economists said output has been flat amid anaemic exports of computer chips and other peripherals. World demand is expected to improve in the second half of the year, but not dramatically.

Economists said the strong second-quarter economic showing was powered by all-round strength - especially in non-electronics manufacturing and construction.

Overall economic growth this year is likely to be closer to last year's impressive 7.9 per cent, they said, after yesterday's figures showed an acceleration from a revised 6.4 per cent first-quarter growth.

This should translate into higher salaries and company profits, and lend further support to the booming property market, the economists said.

Mr Prior-Wandesforde said that Singapore's economic output 'not only improved in the second quarter, as the market expected - it boomed'. He is raising his full-year forecast from 6.3 per cent to about 8 per cent.

Other economists are also bumping up their predictions, and many reckon that the official forecast could be raised to between 6 and 8 per cent. The official forecast is now 5 to 7 per cent.

Expectations have been on the rise since recent data showed a strong rebound in factory output.

With manufacturing back in action after being the weak link in the first quarter, predictions by private economists for second-quarter economic growth had been raised to between 6 and 7 per cent before yesterday's figures.

As it turned out, manufacturing surged 10.2 per cent, beating expectations and the previous quarter's 4.4 per cent. Fuelling this was strong growth in the production of drugs, oil rigs and ships, said the MTI.

The construction sector turned in explosive 17.9 per cent growth - the fastest pace in 10 years. Boosted by the ongoing property boom, builders and suppliers look set to return to the good times they enjoyed before they were hit by the 1997 financial crisis.

'With activities and progress payments likely to accelerate when work begins on the two casinos and other developments, this sector could continue to spring nice surprises,' said Mr Song Seng Wun of stock brokerage CIMB-GK.

The property boom was also felt elsewhere: The services sector clocked 7 per cent growth, partly because banks benefited from lending more money to home buyers.

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Wednesday, July 11, 2007

A surprise to build on

GDP estimates could be revised with 'astonishing' growth of construction sector


SINGAPORE'S economic script for the second quarter — and more importantly, the entire year — was thrown out the window yesterday.

Economists are revising their 2007 growth projections after crunching the latest Gross Domestic Product (GDP) estimates, which are based mainly on the Republic's performance in April and May.

The better-than-expected showing has turned forecasts of moderate growth into predictions of a repeat of last year, when Singapore grew at one of the fastest rates in Asia.

The optimism stems from a year-on-year 8.2-per-cent gain in the second quarter. The script, as the economists had written it, called for an average forecast of 6.7 per cent, which would have been in line with the 6.4-per-cent growth in the first quarter and 6.6 per cent in the three months preceding that.

However, Singapore's rejuvenated construction industry had other plans. The sector grew at its fastest clip in a dreary decade, as prime office rents rose more than three times as fast as in rival hubs Tokyo and Hong Kong, while investors paid record prices for luxury apartments.

DBS Group Research called the 17.9-per cent expansion "astonishing" in a report. Growth was 11.6 per cent in the first quarter.

Some economists have upgraded their full-year GDP forecast to between 7.3 per cent and 7.9 per cent, from about 6.3 per cent to 6.6 per cent.

Mr David Cohen, Asian economic forecasting director at Action Economics, said: "It's reflective of the Singapore economy, firing on all cylinders, as we reach the middle of the year. Together with the optimism seen from the global outlook for the second half of the year, it should make a stronger than expected annual growth for 2007, perhaps a repeat of last year's 7.9-per-cent growth."

Analysts say they expect the Government to also raise its 2007 forecast, which was revised upwards as recently as May, when the Ministry for Trade and Industry (MTI) upgraded growth projections to between 5 and 7 per cent, up from 4.5 to 6.5 per cent.

The data from Singapore — one of the first countries in the region to release its GDP estimates — is likely to be a harbinger of wider positive gains in Asia, and in the world economy.

For all the talk of a pickup in domestic demand and the like, Asian countries remain heavily reliant on exports, especially of things like high tech goods. The strengthening Chinese and European economies have helped support export growth in the region.

In Singapore, manufacturing growth jumped sharply to 10.2 per cent from a dismal 4.4 per cent in the first quarter, as greater output from biomedicals and transport engineering, which includes oil rigs and ships, limited a slump in electronics production.

Shipments of electronics such as semiconductors, disk drives and telecommunications equipment have fallen in seven of the eight months ended May, the worst performance since June 2002.

Said CIMB-GK research head Song Seng Wun: "Barring any sort of nasty surprises from the pharmaceuticals sector in the second half, manufacturing should do reasonably well since we expect (high) technology to be a smaller drag."

Services slowed slightly to 7 per cent from 7.2 per cent, but the MTI called the performance "healthy".

"There's no end in sight to the construction recovery and the services sector will continue to grow," said Mr Robert Prior- Wandesforde, a Singapore-based economist at HSBC. "We can expect strong numbers ahead."

Continued inflows of foreign funds can also be expected.

Asian share markets are trading around multi-year, or even record highs, powered by a host of factors (including the resurgent retail investor) but with a central theme of foreign funds.

In Singapore, more financial services companies are setting up offices.

"The property and financial services sectors are feeding off each other's successes and powering the economy's expansion," said Mr Vishnu Varathan, an economist at Forecast Singapore. "The wealth generated is saturating the stock market and we are bullish on the outlook for growth."

Singapore's share prices yesterday closed 0.18 per cent lower, or 6.40 points to 3,620.32, on profit taking, after surging to an all-time trading peak of 3,653.27 on the economy's second-quarter performance.

More detailed Q2 figures will be released in next month. — AGENCIES

So .... what can we do now?

Just buy more to enjoy more wealth from the economic boom lor!

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Originally Posted by Happy Feet

So .... what can we do now?

Just buy more to enjoy more wealth from the economic boom lor!

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BOOM BOOM BOOM!!!! ALL THE WAY!!! singapore economy has been repressed for so long, we need to BOOM now!!! all the way! we all deserve it for working and saving so hard during the depression years.

dun understand those who wish for a property price drop now, i think they are purely selfish intentions, so that they can buy up condos at a low price. well, AS LONG as there are people like that around, the property market will NEVER drop. because each time it seems like dropping, there will be someone to buy it up. so it will not drop, not any time soon.