SINGAPORE – Singapore's trade-dependent economy grew by an estimated 2.1% in 2015, its worst performance since the 2009 recession, as global demand for Asian exports slumped, official data showed Monday, January 4.
The gross domestic product expansion figure, down from 2.9% in 2014, was based on advance estimates that gross domestic product (GDP) in the fourth quarter of last year rose 2.0% year-on-year.
The 2015 growth estimate was in line with the government's latest revised forecast for GDP to expand close to 2%.
Singapore's GDP contracted by 0.6% in 2009 during the global financial crisis, but rebounded the following year with exceptional growth of 15.2%.
The trade ministry has projected GDP growth of between 1% and 3% in 2016.
Singapore's manufacturing sector, which makes up about a fifth of the economy, contracted 6% in the December 2015 quarter, marking its fourth consecutive quarterly decline.
In 2015, manufacturing sank 4.8%, the ministry said, due to weak demand for key exports like semiconductors and precision engineering products.
Demand for oil drilling rigs has also been dented as exploration activities dwindled due to the prolonged slump in crude prices.
Singapore is the largest manufacturer of jack-up rigs, accounting for 70% of the world market.
Construction and services cushioned the impact of the weak manufacturing sector in 2015.
Construction expanded 7% and services climbed 6.5% year-on-year in the fourth quarter but manufacturing remains a drag.
"Singapore’s manufacturing sector is still mired in recessionary conditions, reflecting moderating Chinese growth, the broader regional slump in East Asian exports and transmission effects to the industrial supply chain," said Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight.
Research house Capital Economics also expressed doubt that Singapore's domestically oriented construction sector can sustain its growth in the face of rising interest rates as the US Federal Reserve continues to tighten monetary policy.
"Higher borrowing costs are likely to further weaken the housing market and dampen construction activity. Rising rates will also crimp consumer spending," it said.
Prime Minister Lee Hsien Loong had cautioned against the slowing economy in his New Year's Day message over the weekend.
"Our economy is slowing down and undergoing transition. We cannot expect an easy journey ahead," he said. – Rappler.com