Singapore's Industrial Output Unexpectedly Accelerates, Bolstering Growth
Singapore’s industrial-production growth unexpectedly accelerated as electronics exports surged, sustaining the economy’s recovery from last year’s global slump.
Output at factories, which accounts for about a quarter of the economy, climbed 58.6 percent in May from a year earlier, after a revised 49.7 percent surge in April, the Economic Development Board said in a statement today. That’s the sixth straight month of growth. The median estimate of 12 economists surveyed by Bloomberg News was for a 37.2 percent gain.
Singapore has raised its growth forecast twice this year as demand for its computer chips and manufactured goods recovers from a trade slowdown that pushed the nation into a recession last year. Still, the island’s economy is at risk if export demand falters as Asian central banks wind back stimulus policies and Europe grapples with a sovereign-debt crisis, according to DBS Group Holdings Ltd. economist Irvin Seah.
“The expansion in the electronics industry on the back on the current information technology boom is expected to be the key driver of manufacturing,” Singapore-based Seah said in a note today. “The key concern for manufacturers going forward would be the demand weakness due to monetary tightening in Asia as well as the austerity drive in Europe.”
Singapore’s central bank has joined Asian neighbors in tightening monetary policy as the region leads a global rebound, saying in April it would undertake a one-time revaluation and seek a gradual and modest appreciation of the currency. Malaysia and India have raised interest rates twice this year and Taiwan unexpectedly increased borrowing costs yesterday.
Singapore’s economy expanded an annualized 38.6 percent from the previous three months in the first quarter. Non-oil domestic exports climbed 24.4 percent in May from a year earlier, the seventh month of gains.
Electronics shipments by companies including Venture Corp., Singapore’s biggest electronics contract manufacturer, climbed 38.9 percent in May from a year earlier, while pharmaceutical shipments fell 32.8 percent, a report showed last week.
Singapore’s industrial production rose a seasonally adjusted 5.2 percent in May from April, when it advanced 17.7 percent from a month earlier.
Electronics production jumped 51.8 percent from a year earlier, following a 60 percent gain in April. Pharmaceutical output surged 121.8 percent.
Production growth of about 50 percent “would point to another stronger-than-expected increase in second-quarter gross domestic product, and on track for annual GDP growth much stronger than the official projection for 7 percent to 9 percent in 2010,” David Cohen, an economist at Action Economics in Singapore, said today before the report.