Singapore GDP up 1.5% Y-o-Y in Q4

On a quarter-on-quarter seasonally-adjusted and annualised basis, the GDP increased by 3.3% in Q4 2012, offsetting the 4.6% contraction recorded in Q3 2012. For the whole of 2012, the economy increased by approximately 1.3%, which is slightly higher than the initial forecast of 1.2%. Further, per MTI data, Singapore maintains its growth forecast of 1.0% to 3.0% for 2013.

Analysis by AsiaBiz Services, a Singapore company setup consultancy, indicates that the Singapore economy has exceeded analysts’ expectations, bolstered by a general improvement in macroeconomic conditions as global financial markets stabilized.

Further analysis points to the construction sector as the main contributor to GDP growth. The industry expanded by 8.2% in 2012, amplified by an increase in public and private building activities. Amid persistent demand for additional infrastructure to accommodate the city-state’s rising population, the property development segment remains robust.

Similarly, an improved services sector is another factor. In particular, financial services and business services each rose by 3.3% y-o-y. Overall, service-producing industries expanded by 1.2% for the whole of 2012, due mainly to an upswing in business services on the back of a strong performance by the real estate segment.

On the other hand, the manufacturing sector declined by 0.1%, slowing from its 7.8% growth in the previous year as a result of a weak electronics cluster. However, on a quarter-on-quarter annualised basis, manufacturing increased by 3.1%, reversing the 16.6% decline in the previous quarter. The q-o-q improvement is attributed to a strong showing in the city-state’s relatively young biomedicals sector, which has outpaced the struggling electronics segment for the first time.

Commenting on the data, AsiaBiz Head of Taxation Mr. James Nuben said, “Global macroeconomic conditions have a huge impact on Singapore’s trade-dependent economy. Although financial markets seem to have stabilized, it is best to remain cautiously conservative.”

“The electronics manufacturing sector, for example, will continue to be sluggish due to a decline in demand. However, the weakness will be offset by a surge in demand for Singapore’s emerging biomedicals segment. In addition, we expect further improvement in service producing industries as well as the consistently bullish construction sector,” he added.

“Overall, if current trends continue, we are in good stead to achieve the higher end of the projected 3% growth this year. Subsequently, amid the upturn in both domestic and global conditions, investor confidence and the demand for the incorporation of Singapore companies are expected to increase. Singapore, after all, is still the world’s easiest place to do business,” he said in conclusion.