Singapore's GDP up by 1.8% q-o-q

Singapore’s economy experienced a marginal increase in the last quarter of 2012, narrowly avoiding a technical recession following a difficult period, according to the latest data released by the Ministry of Trade and Industry.

The city-state’s gross domestic product (GDP) expanded by 1.8% on a quarter-on-quarter (q-o-q) annualized seasonally adjusted rate in Q4 2012.

The Q4 increase reversed the 6.3% q-o-q decline from the preceding quarter, and effectively saved Singapore from expectations of recession prior to the start of the new year.

A robust service sector contributed largely to the GDP growth. This includes gains in finance, tourism, and insurance sectors. Overall, the industry expanded 7% q-o-q in the final three months of 2012, which helped offset the 3.9% q-o-q sequential contraction in Q3.

Manufacturing, on the other hand, experienced the highest decline, contracting by an annualized 10.8% q-o-q in the last quarter of 2012. On a year-on-year basis, the volatile manufacturing industry shrank by 1.5% in Q4.

“Due to the persistent crisis in the global market, Singapore’s manufacturing industry is suffering from a decrease in demand for its exports, particularly in the electronics cluster,” observed Mr. James Neuben, Head of Taxation at Singapore company incorporation specialist AsiaBiz Services.

“In addition, the restructuring of the Singapore work pass framework has driven up labor costs and affected the production bottom line. This, plus other factors, contributed to an industry-wide instability, which has far-reaching connotations in Singapore’s trade-driven economy,” he added.

“On a positive note, the strong rebound of the service sector is indicative that conditions are improving,” he remarked. “Albeit modest, the industry’s growth may signal better times ahead. If the trend continues, there may be cause for optimism in the coming months.”

Meanwhile, current forecasts point to a conservative GDP increase of 1%-3% in 2013.

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