Singapore Production Unexpectedly Falls; Currency Declines
Singapore’s industrial production unexpectedly declined for the first time in four months in August as companies reduced output of electronics, pushing the local dollar to the weakest level in two weeks.
Manufacturing fell 2.2 percent from a year earlier after a revised 2.5 percent gain in July, the Economic Development Board said today. The median of 16 economists surveyed by Bloomberg News was for a 1 percent increase.
The World Trade Organization last week cut its forecast for commerce growth this year, and the International Monetary Fund is preparing to reduce its global expansion estimates, Managing Director Christine Lagarde signaled. Singapore trimmed its gross domestic product outlook for 2012 after the economy contracted in the three months through June from the previous quarter.
“There’s a risk that weak numbers will tip Singapore into a technical recession,” Selena Ling, a Singapore-based economist at Oversea-Chinese Banking Corp., said before the report. “There are hopes that global stimulus implementation will give a boost or stabilize output towards the year-end. But it’s too early to see any strong recovery in the pipeline.”
The Singapore dollar fell 0.3 percent to S$1.2314 against the U.S. currency as of 1:47 p.m. local time, paring its gain this year to 5.3 percent.
The island’s central bank, which uses the exchange rate to manage inflation, said in April it would allow faster local dollar gains to damp price pressure. Economists including Irvin Seah at DBS Group Holdings Ltd. have said they expect the monetary authority to ease its policy stance next month and adopt a more gradual pace of currency appreciation as growth risks increase.
Output fell a seasonally adjusted 2.3 percent from the previous month, when it slid a revised 8.7 percent.
Electronics production declined 7.3 percent from a year earlier in August, while pharmaceutical output rose 13.6 percent. Chemicals increased 6.6 percent, the report showed.
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