More NSS,ERS? I sure hope so.

Singapore 2005 GDP growth better than expected

MONDAY , 02 JANUARY 2006


SINGAPORE: Singapore's export-driven economy grew by a better-than-expected 5.7 per cent in 2005 and should expand at a previously forecast rate of three to five per cent next year, the prime minister said on Saturday.

Lee Hsien Loong said the city-state posted broad-based growth this year thanks to a sharp rise in manufacturing output and a stronger services sector.

"Many businesses, from banks to shipyards, reported better results," Lee said in a New Year's address released to the media.

"Retail sales were brisk and the property market showed signs of improvement," he said, adding that Singapore drew a record 9 million tourists this year.

In October, the government raised its full-year growth forecast to 5 per cent from a range of 3.5 per cent to 4.5 per cent, following strong third-quarter GDP results.

A Reuters poll had forecast 2005 growth at a median 5.5 per cent due to strong manufacturing output, especially in the biomedical and transport engineering sectors.

"We started the year on a low note and we are ending the year on a high because all sectors bounced back," said Chua Hak Bin, an economist at DBS Bank.

"The economy has proved to be remarkably resilient. We saw an across-the-board upward swing."

Lee said Singapore's external trade grew by 14 per cent in 2005, boosted by the island-state's growing network of free trade agreements.

"To sustain growth, we must press on with economic restructuring. We have to continue to change and adapt, in order to stay competitive and vibrant," he said.

Singapore grew a robust 8.4 per cent in 2004 after recovering from the Sars crisis a year earlier. This year's growth rate would be the second highest since 2000, when the economy grew by 9.6 per cent.

Economists said the island's high-technology goods and drugs production bolstered output and exports in the fourth quarter.

Song Seng Wun, an economist at CIMB-GK Research, said the 5.7 per cent full-year figure would put annual growth for the fourth quarter at 7.7 per cent and annualised quarterly growth at about 10 per cent, after adjustments for seasonal patterns.

"The goods-producing sector, especially manufacturing, was sustained by pharmaceuticals and transport engineering, and also supported by the tech cluster," he said.

Lee's comments preview advance estimates on gross domestic product - the total value of goods and services - for 2005 and the fourth quarter, due to be released on Tuesday at 8am (1pm NZT). The data is largely based on figures from October and November.

Economists said the solid 2005 growth figure could prompt the government to hold an early general election, which is not due till June 2007.

Singapore's economic growth has steadied in the second half of the year after a choppy first half.

GDP contracted at an annualised rate of 4.6 per cent in the first quarter, due in large part to a fall in drugs production, but then rebounded by 18 per cent in the second quarter.

Exporting economies in Asia, including Singapore, are expecting a pick up in the pace of exports to continue early in 2006, bolstered by a recovery in the global tech sector and economic expansion in the United States and China. - Reuters