Singapore economy expands for 2nd straight quarter

AP News
|
Posted: Nov 19, 2009 4:10 AM

Singapore said its economy would expand as little as 3 percent in 2010, well below the high growth rates of past years because of a sluggish recovery in the U.S. and other developed countries.

The forecast came Thursday as the city-state reported a second straight quarter of economic growth with the manufacturing and service sectors lifting it out of a deep recession.

Gross domestic product expanded an annualized 14.2 percent in the third quarter following a jump of 21.7 percent the previous quarter, the Trade and Industry Ministry said. The government in October initially reported third quarter growth of 14.9 percent.

The ministry forecast economic growth of 3 percent to 5 percent next year _ a lackluster performance compared with Singapore's record of annual growth averaging nearly 8 percent in the past few decades. The economy is expected to shrink between 2 percent and 2.5 percent this year.

Singapore relies on trade, finance and tourism to sustain one of Asia's highest living standards.

The ministry said the recovery in developed economies from the global recession remains "fragile" and its durability is uncertain.

"Weak household balance sheets and persistently high unemployment, especially in the U.S., will continue to weigh on consumer demand," it said. "A sluggish recovery ... will moderate Singapore's growth prospects."

In the third quarter, Singapore's economy expanded from a year earlier for the first time since the third quarter of 2008. GDP was up 0.6 percent from the July-September quarter of 2008.

Manufacturing soared an annualized 26.6 percent in the third quarter while services grew 10.8 percent.

However, the economy showed signs of sluggishness in October, when exports fell a seasonally adjusted 12.6 percent from the previous month and dropped 6.1 percent from a year earlier.

"Singapore will have to live with a weaker demand" from major economies, said Morgan Stanley economist Chetan Ahya.