Singapore escaped a technical recession after the economy grew in the fourth quarter thanks to a boost from services, government data showed yesterday, but prospects for 2013 remain gloomy.
The Ministry of Trade and Industry said that gross domestic product rose by an estimated 1.1% YoY in the three months to December, from zero growth in the previous quarter.
Analysts feared the economy may have slipped into a technical recession two successive quarters of contraction after Prime Minister Mr Lee Hsien Loong said on Monday that GDP rose a mere 1.2% for the full year, below the government's target of 1.5 to 2.5%.
Mr Lee also said GDP was expected to grow just 1.0-3.0% in 2013.
Regional economist Song Seng Wun of CIMB Research said that "The prospects remain subdued for Singapore even though we averted a technical recession, and the weakness in the manufacturing sector underscores that vulnerability.”
On a quarter on quarter basis, the economy expanded by a seasonally adjusted annualised 1.8% in the December quarter, reversing a 6.3% contraction in the July-September period.
Weakness in the manufacturing sector was a major drag for the economy, but a resilient services sector took up some of the slack.
Mr Leif Eskesen chief economist for India and Southeast Asia at global banking giant HSBC said that "Growth picked up on the back of firmer service sector activity, outweighing a contraction in the manufacturing sector led by a weak electronics cluster.”
He said that "The positive impetus primarily came from wholesale and retail, finance and insurance, as well as 'other' services.”