Singapore's Full-year growth to Beat Forecast

Singapore's economy in the third quarter grew by an estimated 6 per
cent from a year ago, raising hopes that full-year growth may exceed
the government forecast of 3.5-4.5 per cent.

Singapore's "flash estimate," based on data for the first two
months of the July-September period, is closely watched as an indicator
of regional economic performance since the city state is the first
developed Asian economy to release third-quarter figures.

The estimate met market expectations based on forecasts that Singapore
would benefit from increased pharmaceutical production.

The government also revised upward its growth figure for gross domestic
product in the second quarter to 5.4 per cent from 5.2 per cent.

However, growth slowed on a quarter-on-quarter basis to 3.2 per cent in
the July-September period from 18 per cent in March-June, when the
economy was rebounding from a first-quarter contraction.

Manufacturing in the third quarter rose by 10 per cent from a year ago,
compared with a revised 6.3 per cent in the second quarter, due to a
strong performance in the biomedical sector.

Singapore has been developing a biomedical industry to reduce its
dependence on electronics, its biggest export sector.

GDP growth in the fourth quarter could accelerate if electronics
production recovers from a recent global slowdown.

But some analysts warn that the expected robound in electronics may not
be as strong as earlier predicted, with exports rising by only 1.7 per
cent in August as production fell 0.9 per cent.

The economy is also subject to the volatile nature of the
pharmaceutical sector because of sudden changes in product mix and the
timing of production.

The service sector, which accounts for 60 per cent of GDP, expanded by
5.1 per cent from a year ago, unchanged from the previous quarter,
which disappointed some analysts who expected stronger growth.

Construction is struggling to recover from a slump that began in 2001,
with the sector falling by 0.7 per cent from a year ago, compared with
a contraction of 0.8 per cent in the second quarter.

By John Burton in Singapore

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