MTI upgrades Singapore's 2010 growth forecast to 7%-9%

Manufacturing sector’s 139% expansion paved the way to increase GDP growth forecast from earlier 6.5%-7.5% estimate.

The Ministry of Trade and Industry (MTI) announced on Wednesday that it expects the Singapore economy to grow by 7.0 to 9.0 per cent in 2010.

Advance estimates indicate that Singapore’s GDP expanded strongly by 13.1 per cent on a year-on-year basis in the first quarter of 2010. On a seasonally adjusted quarter-on-quarter annualised basis, Singapore’s GDP grew by 32.1 per cent.

Growth was led by the manufacturing sector. On a quarter-on-quarter annualised basis, the sector expanded by 139 per cent in the first quarter of 2010, compared to the contraction of 29.0 per cent in the fourth quarter of 2009. The sharp improvement in performance could be attributed to two key factors – first, the robust expansion of electronics production underpinned by a strong recovery in global semiconductor chip sales; and second, a stronger-than-expected surge in biomedical manufacturing output.

The construction sector grew by 11.3 per cent on a year-on-year basis in the first quarter of 2010, supported by sustained public sector civil engineering activities and an increase in the number of residential construction projects.

The services producing industries also expanded, registering a year-on-year growth of 8.4 per cent. Expansion was driven largely by wholesale trade, which improved on the back of sharp increases in exports of electronic goods. Growth in transport and storage, hotels and restaurants as well as financial and business services also contributed to improved performance for the services sector.

While downside risks remain, such as a sovereign debt crisis in Europe or a slowdown due to withdrawal of fiscal measures, these have been outweighed by stronger signs that global economic conditions are improving. In view of the exceptionally strong growth for the Singapore economy in the first quarter and the overall improved outlook for external economies for the rest of 2010, MTI is upgrading the GDP growth forecast for 2010 from 4.5 to 6.5 per cent to 7.0 to 9.0 per cent.