Chart of the Day: Singapore GDP and Key Components

Is the economy bottoming out in the first quarter of 2012?

Singapore expanded by 3.6% year-on-year (yoy) in 4Q11. This was unchanged from the advanced estimates announced earlier, and lower than consensus and our expectations of 4.3% and 4.4% respectively. On a seasonally-adjusted quarter- on-quarter (sa qoq) basis, real GDP contracted 2.5% in 4Q, an improvement from the advanced estimates of 4.9%. Full- year GDP rose 4.9%, compared to the advance estimates of 4.8% (2010: 14.8%) and our forecast of 5.1%.

OSK-DMG Group Economics analyst Leslie Tang commented: “4Q11 GDP disappointed because we had thought that it would be upgraded because of stronger industrial production in Dec. Instead, the services sector growth was revised lower to 2.1% yoy in the quarter (+1.7 sa qoq) vs. the advance estimates of 3.2%, serving as a drag on growth in the quarter.”

Within services, transport & storage, accommodation and food, infocomms and financial services contracted on a sa qoq basis. Manufacturing had a strong quarter as expected, expanding by a revised 9.2% yoy vs. 6.5% from the advanced estimates, on the back of a healthy performance by pharmaceuticals. On a sa qoq basis, manufacturing declined 11.1% in 4Q. Also revised upwards was construction (4Q: 2.9% yoy vs. Adv: 1.7%).
For the full-year, manufacturing and construction rose 7.6% and 2.6% respectively as compared to 29.7% and 3.9% in 2010. Services also moderated in 2011, expanding by 4.4% vs. 11.1% in the previous year.

“Despite the challenging external environment, we continue to expect the economy to bottom out in 1Q2012 before picking up steam in 2H12 on the back of support from pharmaceuticals and services. We do recognize there are downside risks (namely the recession in the Eurozone deepens, US growth falters and/or China has a “rough landing”) that could see real GDP come in substantially below our growth projection for 2012. But we think that these are unlikely at the moment and maintain our real GDP growth projection at 4.0% for 2012,” she said.