July 10, 2008

S'pore's Q2 growth slows to 1.9% - lowest in 5 years

SINGAPORE'S economy grew at the slowest pace in five years in the second quarter, as production in biomedical manufacturing fell sharply amid sliding overseas orders and rising inflation curbed spending.

Gross domestic product rose 1.9 per cent from a year earlier, down from 6.9 per cent in the first quarter, the Ministry of Trade and Industry (MTI) said in a statement on Thursday morning.

The economy shrank an annualised 6.6 per cent from April to June, declining for the second time in three quarters after a 15.6 per cent rise in the previous quarter.

Singapore still expects growth this year to be between 4 per cent and 6 per cent, Finance Minister Tharman Shanmugaratnam said on Wednesday. It expanded 7.7 per cent last year.

"The slowdown chiefly reflected a sharp contraction in biomedical manufacturing output. Excluding the biomedical sciences (BMS) cluster, industrial production grew moderately," said the MTI statement.

The manufacturing sector contracted by 5.6 per cent in the second quarter, compared with a 12.7 per cent growth in the first three months.

MTI said the electronics cluster also registered some decline, mainly because of weakening foreign demand.

However, other industries such as transport engineering and chemicals continued to grow.

The construction sector is estimated to have grown by a robust 15.2 per cent in the second quarter, following a 16.9 per cent expansion in the preceding quarter.

The services producing industries are estimated to have grown by 6.9 per cent in the second quarter, compared with 7.6 per cent a quarter ago.

Growth was led by the financial services and business services sectors. Sectors such as wholesale & retail trade and transport & storage also posted healthy growth during the quarter.

The preliminary GDP estimates for the second quarter, including performance by sectors, sources of growth, inflation, employment and productivity, will be released in August.