Singapore Economy Expanded 17.9% in First Half, Growth May Ease
Singapore’s economy expanded less than previously estimated in the first half of 2010 and growth may “moderate” in the coming months, Prime Minister Lee Hsien Loong said.
The Southeast Asian nation’s gross domestic product rose 17.9 percent in the six months through June from a year earlier, Lee said in a televised National Day message in Singapore late yesterday. That compares with a record 18.1 percent pace reported in July. The economy may grow 13 percent to 15 percent in 2010, Lee said, reiterating an earlier forecast.
The island is in the running to be the world’s fastest- growing economy in 2010 amid an Asian rebound that has prompted neighbors including Malaysia and India to raise interest rates and Singapore to revalue its currency. Still, manufacturing growth slowed in June as Europe’s sovereign-debt crisis and slowing U.S. growth threatened the global recovery.
“Risks remain in the world economy, especially in Europe and the U.S.,” Lee said. “The global financial system is not fully mended. If the world economy turns bad, we will be buffeted. We need to stay vigilant and watch the developments worldwide.”
Singapore’s economy grew an annualized 26 percent in the second quarter from the previous three months as tourism and exports surged, according to initial government estimates released on July 14. The median forecast of seven economists surveyed by Bloomberg News is for a 25.2 percent expansion. The trade ministry will release updated GDP data on Aug. 10.
A year after Singapore exited its worst recession since independence in 1965, tourists are arriving in record numbers and companies including Standard Chartered Plc are boosting hiring. The city state added an estimated 26,500 jobs in the three months ended June, after the creation of 36,500 positions in the first quarter, according to the Ministry of Manpower.
“Our economy has rebounded strongly from last year’s recession,” Lee said. “We cannot expect to repeat this year’s sterling performance year after year, but we can continue to grow our economy with sustained effort.”
The benchmark Straits Times stock index has outperformed its peers in Hong Kong, Taiwan, China and Japan, while the currency has appreciated 3.8 percent against the U.S. dollar this year.
Monthly tourist arrivals in Singapore exceeded the 1 million mark for the first time in July, aided by the opening of two casino-resorts run by Genting Singapore Plc and Las Vegas Sands Corp. Efforts to boost tourism also include hosting the Formula One night race, which will take place in September for the third year in Singapore.
A government-appointed panel earlier this year unveiled strategies to help the city state grow at a sustainable rate and faster than advanced economies. Singapore’s biggest challenge is to stay “economically relevant in a fast-changing world,” said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. in Singapore.
“As Singapore is a small, open economy, it faces the vicissitudes of shortening business cycles and increasing competition from other emerging markets,” Ling said. “So far, Singapore has managed to stay a step ahead of the competition game, but the rules of the game are also rapidly evolving.”
The country aims to at least double its productivity growth to between 2 percent and 3 percent annually in the next decade. It has raised levies on foreign workers to reduce companies’ reliance on cheap imported labor.
Prime Minister Lee said at the end of 2009 he would “moderate” the inflow of foreign workers so that citizens aren’t “overwhelmed.” In July, he said Singapore would need 100,000 more foreign workers this year to cool an “overheating” labor market. An Institute of Policy Studies survey released this month shows six out of ten Singaporeans say national unity will be affected by the government’s policy to attract foreign talent.
Singapore needs to “reinforce” its population with “talent and numbers from abroad,” Lee said yesterday.
“This is critical to us,” he said. “Other countries are not only much larger than us, but have far deeper pools of talent than we have. We must make up for the shortage of Singaporean workers in our economy and the shortfall of babies in our population.”
The government will control the inflow of foreigners to ensure that it’s not too fast or too large, Lee said.
Among the 183 economies for which the International Monetary Fund has forecasts, only Qatar is calculated to expand faster than the government’s forecast for Singapore. The island celebrates the 45th year of independence today with a parade of tanks, artillery and fighter jet displays.