Singapore economy stalls as manufacturing slumps

AP News
Posted: Jul 13, 2011 11:44 PM
Singapore economy stalls as manufacturing slumps

Singapore's economy stalled in the second quarter as manufacturing slumped amid weaker global demand for the city-state's exports.

Gross domestic product grew 0.5 percent in the April to June period from a year earlier, the Trade and Industry Ministry said Thursday. Industrial production slid 5.5 percent while services expanded 3.3 percent, the ministry said.

Singapore enjoyed record economic growth last year as the global economy recovered from recession and two new casino-resorts boosted tourist arrivals. GDP surged 14.5 percent in 2010, and the government in May said it expected growth of up to 7 percent this year after a 9.3 percent expansion in the first quarter.

But the expansion petered out last quarter as production of electronics and pharmaceuticals dropped, the ministry said.

The economy contracted a seasonally adjusted and annualized 7.8 percent from the first quarter as manufacturing plunged 23 percent.

"The Singapore economy's roller-coaster ride continues with a vengeance," said Robert Prior-Wandesforde, an economist with Credit Suisse in Singapore. "The fundamentals point to a soft patch rather than anything more serious."

Higher oil prices, a struggling Japanese economy in the aftermath of a devastating earthquake and tsunami and Europe's ongoing debt crisis all helped dampen global economic growth in the second quarter.

China said Wednesday that its economy grew 9.5 percent in the second quarter, slowing slightly from 9.7 percent in the previous quarter.

Singapore has sought in recent years to develop its tourism industry in a bid to become less dependent on manufacturing.

Along with casinos built by Las Vegas Sands and Malaysia's Genting, a slew of flashy new malls have sprung up in the last two years on the island's Orchard Road shopping strip, bringing in visitors from countries such as Indonesia, Malaysia and China.

"Singapore is the hub of Southeast Asia for luxury shopping," said Jean-Baptiste Debains, Asia-Pacific president for luxury goods maker Louis Vuitton, in an interview on Wednesday.

Debains said LV plans to open its fifth store in Singapore in September.

The second quarter economic data is preliminary and is compiled mostly from April and May statistics, said the ministry, which is scheduled to release complete figures next month.