Economists Talk Down Possibility Of Technical Recession In Singapore

Source : Channel NewsAsia, 04 January 2008

Private sector economists are taking a positive stance on the Singapore economy.

With GDP numbers for the fourth quarter of 2007 showing a contraction from the previous three months, yet another such dip would mean a technical recession.

This would happen if growth numbers for the first quarter of this year show a decline from the previous three months.

But economists polled by Channel NewsAsia prefer to talk about a rebound instead.

The construction sector more than pulled its weight in the fourth quarter, helping to compensate for sluggish numbers from manufacturing.

While data from pharmaceuticals and electronics was disappointing, analysts said that they expect to see an uptick for the current three months.

UOB economist, Ho Woei Chen, said: "I think that going forward, there is scope for an upturn in the manufacturing sector, growth in the first half of 2008. We see some support coming from transport engineering as well as the biomedical sector.

"The pharmaceutical output has been rather weak in October and November. As a result, there's scope for an upturn in the first half of this year. For the electronics, it is more sensitive to the global business cycle and as a result it is more vulnerable. Despite that, after a year or so of weak growth.....the base is low enough for some recovery."

He went on to say: "People are talking about the possibility of a technical recession, which is two consecutive quarter-on-quarter declines in growth in the GDP. I think that we shouldn't be too worried on that at the moment. There's job growth, fantastic job growth in the last two or three years. I don't see any concern about a slowdown in the coming quarters, especially since we have 17
quarter-on-quarter expansion, before the contraction in the 4th quarter."

Standard Chartered economist, Alvin Liew, said: "Right now, we are not looking at a contraction in the first quarter of this year....But the risk is, obviously, we are looking at developments (like)... slower external markets as well as the sub-prime issue has not yet been fully unravelled and it could make a turn for the worse. If that happens, a technical recession is not out of the question."

High oil prices and a weak dollar are other factors posing a downside risk.

Overall, Singapore's economic growth is forecast to moderate this year to between 4.5% and 6.5%, after the 7.5% expansion in 2007. - CNA/ir