Singapore has just narrowly avoided slipping into recession, after it successfully managed to boost growth during the last three months of 2012, new data has revealed.
That it so nearly contracted is cause for concern as its renown for being a successful and wealthy country – thanks in large part to a highly developed free market economy – has been indicative of the general strength of Asian countries to endure economic hardship.
Having sheltered itself remarkably well against the fallout of the 2008 financial crisis, it has continued to thrive, continuing to trade at a level that is roughly three times that of its GDP.
However, while domestically it has been able to perform consistently; exports have naturally dipped as a result of – for the most part – the diminishing power of European nations, embroiled as they have been in rectifying their deficits.
Consequently, the demand for many of its exports – including consumer electronics, information technology products and pharmaceuticals – has dwindled. While its financial services sector remains relatively buoyant, there is only so much that this can deliver on.
“In the near term, it’s hard to see any improvement in manufacturing,” commented Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. “Hopefully, services can continue to provide a lift going forward.”
It was, in part, the finance sector, along with a return to partial form in the retail and insurance industries respectively that helped Singapore avoid recession.
As a result, the country recorded a 1.1 per cent growth between October and December. This was against expectation no less.
“On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 1.8 per cent, an upturn from the contraction of 6.3 per cent in the preceding quarter,” the Ministry of Trade and Industry stated.
“For the whole of 2012, the economy is estimated to have grown by 1.2 per cent. This is slightly lower than MTI’s growth forecast of around 1.5 per cent, as the weakness in the manufacturing sector continued to weigh down on the economy.”
For the year ahead, Singapore has made a modest forecast for growth. In a speech, prime minister Lee Hsien Loong estimated that it could be as low as one per cent. However, he did hint that there remained the distinct possibility of its economy expanding by a decent three per cent.
Singapore does have resolution though, as was shown in the immediate years following the global financial meltdown. Its economy only retracted by one per cent in 2009 and bounced back in spectacular fashion in 2010 with growth of 14.8 per cent.
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