Singapore's 2010 GDP falls short of expectations

The economy registered a full year growth of 14.7% despite expanding in 4Q10, and failed to meet the analysts’ 15% prediction.

In a statement, DBS Bank said the country’s 14.7% full-year GDP growth was a “tad off our expectation.”

It added, however, that the 6.9% QoQ saar (12.5% YoY) growth Singapore posted was “much in line” with its prediction that the economy will advert a technical recession and continue to expand in the final quarter after the record sequential drop in the previous quarter.

Except for the construction sector that has continued to cool (-18.5% QoQ saar, -1.2% YoY) due to a lack of strong growth impetus, key manufacturing and services sectors recorded better performance.

The manufacturing sector posted a 20% QoQ saar (28.2% YoY) rebound on the back a recovery in the pharmaceutical segment while the services sector (4.7% QoQ saar, 8.8% YoY) was boosted by good showing from the financial and tourism related services segments.

DBS predicts a 7% growth for the economy this year and expects the services sector to be the key driver of growth and job creation.

“Based on our estimation, this sector will contribute 5.3%-pt to overall growth and generate about 3/4 of the total job creation of 140K this year,” the bank said.

DBS also said that although the possible capacity expansion in the pharmaceutical segment “could still spring upside surprises” for the economy, the moderation in global electronics demand and the tepid recovery in the G3 economies may erode an otherwise healthy showing from the sector.

The bank noted, however, that fallout in manufacturing growth is unlikely.

DBS said growth momentum in the construction sector, meanwhile, will continue to moderate due to completion of the mega projects, property cooling measures as well as increase in foreign worker levies.

“A slew of ongoing public transportation projects should at least provide some support to the sector going forward,” the bank said.