Singapore economy only grew 4.9% in 2011

Performance is way down from the 14.8% growth recorded in 2010 and will still worsen in 2012.

Seasonally adjusted, the Singapore economy contracted 2.5% qoq, backsliding from the 2% growth in the previous quarter, said the Ministry of Trade and Industry Singapore in a release.

4Q 2011 was particularly crippling, with GDP expanding a below-par 3.6% compared to the 6% in 3Q 2011. Manufacturing led the decline for the final quarter with an 11.1% contraction. Several other sectors suffered sequential declines, from construction (2.2%) to transportation & storage (2.9%) to finance & insurance (4.4%).

Here's the full report from MTI detailing the 4Q 2011 and full-year 2011 results, as well as the outlook for 2012:

Performance in Fourth Quarter 2011

The manufacturing sector grew by 9.2 per cent on a year-on-year basis, slower than the 13.7 per cent growth in the third quarter. On a sequential basis, the manufacturing sector contracted by an annualised rate of 11.1 per cent, following the 11.0 per cent expansion in the previous quarter. This was due to a decline across most manufacturing clusters. In particular, the electronics cluster contracted sharply due to weakened global demand for semiconductor chips. The chemicals cluster also registered a lower level of output, due to plant shutdowns.

The construction sector grew by 2.9 per cent on a year-on-year basis, a slight improvement from the 2.4 per cent growth in the preceding quarter. On a sequential basis, the sector contracted by 2.2 per cent (annualised) largely due to a decline in private residential and commercial building activities.

The wholesale & retail trade and transportation & storage sectors registered relatively weak growth of 0.9 and 2.4 per cent respectively on a year-on-year basis. On a sequential basis, the wholesale & retail trade sector expanded by an annualised pace of 10.2 per cent, reflecting a pick-up in re-export activities. By contrast, the transportation & storage sector contracted by 2.9 per cent.

Growth in the finance & insurance and business services sectors were modest, at 3.5 and 1.9 per cent respectively on a year-on-year basis. On a sequential basis, the finance & insurance sector declined by 4.4 per cent (annualised), dragged down by poor performance in the sentiment-sensitive segments such as fund management and stock broking. Growth momentum in the business services sector picked up slightly to 2.4 per cent.

Supported by rising visitor arrivals, the accommodation & food services and other services industries (which include arts, entertainment and recreation activities) grew by 3.3 and 2.3 per cent respectively compared to a year ago. Growth was generally flat for both sectors compared to the previous quarter.

Overall Performance in 2011

For the whole of 2011, the economy grew by 4.9 per cent. The manufacturing sector expanded by 7.6 per cent, helped by the surge in biomedical manufacturing output which offset the contraction in the electronics cluster and
slower growth in the precision engineering and chemicals clusters. The construction sector grew by a modest pace of 2.6 per cent, supported by public sector building activities.

The services producing industries grew by 4.4 per cent, anchored primarily by growth in the finance & insurance and tourism-related sectors. The finance & insurance sector grew by 9.1 per cent on account of continued growth in domestic and offshore lending activities, even as stock trading activities fell. The accommodation & food services and other services industries grew by 5.8 and 6.7 per cent respectively on the back of healthy visitor inflows.

Economic Outlook for 2012

The global economic outlook remains subdued. Although the US economy has shown signs of pick-up, particularly in employment and consumer spending, the strength of the recovery will be restrained by public spending cuts as well as continued weakness in the housing market. In the Eurozone, the economy is expected to enter into a recession as fiscal consolidation and bank deleveraging dampen private demand. The major Asian economies are also likely to see slower growth as external headwinds erode export performance.

Against this macroeconomic backdrop, Singapore’s external-oriented sectors will face a challenging environment ahead. In view of the above factors, MTI is maintaining its 2012 economic growth forecast at 1.0 to 3.0 per cent.