Business Times – 11 Aug 2008
SINGAPORE – Singapore’s economy grew at the slowest pace in five years. The gross domestic product expanded 2.1 per cent in the second quarter, after growing 6.9 per cent in the first quarter.
The Ministry of trade and Industry said on Monday the economy was hurt by a plunge in drugs output and stagnant growth in the electronics industry.
‘The lower growth in the second quarter was mainly the result of a sharp contraction in biomedical manufacturing value-added, reflecting a switch in product mix to pharmaceutical ingredients with lower values compared to a year ago,’ MTI said in a press release.
It also said the economy shrank at a annualised rate of 6 per cent in the three months to June, the second contraction in three quarters.
The latest GDP figure was better than an advance official estimate of 1.9 per cent growth. Manufacturing shrank 5.2 per cent in the second quarter from a year earlier, while construction increased 17.4 per cent.
The service sector continued to grow at a healthy pace, thought slightly slower than in the first quarter. The financial services sector expanded 10.2 per cent while the business services was up 7.5 per cent.
The Ministry said the full-year growth target for 2008 has been cut to 4.0-5.0 per cent from 4.0-6.0 per cent, a downward revision first announced by Prime Minister Lee Hsien Loong in his National Day message on Friday.
It said the revised growth target ‘is consistent with the moderation in economic growth seen in the second quarter.’
It said the outlook for the second half of the year was not expected to improve much with major economies seeing a slowdown that would in turn affect exports from Asia, including Singapore.
MTI said it expected the ‘electronics industry to remain soft in the second half of 2008, reflecting weak demand for semiconductors.
On the short-term outlook of biomedical manufacturing, it said the sector ‘will be weighed down by global trends such as strong competion from generic drugs and delays in approvals for new pharmaceuticals.’