S'pore's Recession Eases

Source : The Straits Times, July 14, 2009

SINGAPORE'S economy grew for the first time in a year in the second quarter, led by the biomedical and electronics sectors, suggesting the city state was emerging from its worst ever recession.

The economy soared 20.4 per cent in the three months to June compared with the first three months of the year on a seasonally adjusted annualised basis, the Ministry of Trade and Industry said, while raising its forecast for 2009.

Gross domestic product (GDP) was now expected to contract 4-6 per cent for the year from an earlier projection of 6-9 percent, the ministry said, while warning that any recovery would be weak due to the fragile global economy.

It was the first quarter-on-quarter growth in five quarters. Singapore slipped into a recession in the second half of last year after two successive quarters of contraction.

Compared with the previous year, however, output in the June quarter was down 3.7 per cent, indicating that the export-driven economy remained weak.

'I guess technically the recession would have ended, the economy is growing again,' said David Cohen, an economist with research house Action Economics.

'Growth won't be very strong but it should remain in an upward trajectory,' he told AFP.

'The Singapore economy registered a stunning turnaround in the second quarter, much is in line with our expectation,' DBS Group said in a research note.

Despite the quarter-on-quarter growth, the trade ministry cautioned that 'the outlook for the rest of the year remains largely unchanged - of a weak recovery susceptible to downside risks.'

It noted that rising unemployment and reduced consumer spending in its major export markets like the United States and Europe reflected the continued weakness in the global economy. Mr Cohen said however he was cheered by the second quarter numbers.

'I think this will be the first in a series of upbeat GDP reports for the second quarter from Asian economies,' he said, noting that China and South Korea would also be announcing their growth data in the next two weeks.

'Maybe this will provide some reassurance to the markets which have been jittery in the last few weeks about the sustainability of the recovery. It shows that Asian economies have turned the corner in the second quarter.' -- AFP