Singapore econ­omy shrinks 4.1 per­cent in third quar­ter

Kuwait Times - - BUSINESS -

SINGAPORE: Singapore’s ex­port-driven econ­omy shrank the most in four years in the third quar­ter, of­fi­cials said yes­ter­day, as man­u­fac­tur­ing sharply con­tracted on weaker global de­mand. The city-state, which is re­garded as a bell­wether for Asia’s other trade-re­liant economies, has been hit hard by the slump in crude prices and slug­gish world growth, which have hurt its key oil and gas ser­vices sec­tor. Its cen­tral bank, which uses the ex­change rate rather than in­ter­est rates to keep prices sta­ble, yes­ter­day main­tained its mon­e­tary pol­icy of zero-per­cent ap­pre­ci­a­tion in the ex­change rate for the lo­cal cur­rency. The econ­omy con­tracted 4.1 per­cent in the Septem­ber quar­ter from the pre­vi­ous three months, ac­cord­ing to pre­lim­i­nary data re­leased by the trade min­istry.

That com­pares to an­a­lyst ex­pec­ta­tions for flat growth and comes af­ter a 0.2 per­cent in­crease in the pre­vi­ous three months. On an an­nual ba­sis, growth came in at an anaemic 0.6 per­cent, the slow­est pace since 2009. An­a­lysts pointed to a 17.4 per­cent quar­ter-on-quar­ter slump in man­u­fac­tur­ing, which makes up about a fifth of the econ­omy, for the dis­ap­point­ing data. De­mand for Singapore’s ex­ports, which in­clude oil drilling rigs, phar­ma­ceu­ti­cals and semi­con­duc­tors, has been weak­en­ing as the global out­look de­te­ri­o­rates.

“The marine and off­shore en­gi­neer­ing sec­tor is the weak­est clus­ter of Singapore’s man­u­fac­tur­ing sec­tor,” Ra­jiv Biswas, chief Asia Pa­cific econ­o­mist at IHS Global In­sight said. “Oil and gas com­pa­nies have sharply re­duced ex­pen­di­ture on oil rigs and off­shore sup­port ves­sels.” This month debt-laden Swiber Hold­ings, a Singapore-listed com­pany that pro­vides con­struc­tion ser­vices for in­ter­na­tional oil and gas projects, was placed un­der ju­di­cial man­age­ment as it im­ple­ments a res­cue plan. Singapore ac­counts for 70 per­cent of the global mar­ket for jack-up rigs and is a ma­jor player in off­shore sup­port ves­sels for the oil and gas in­dus­try.

The re­cent up­swing in crude prices to around $50 a bar­rel-af­ter toy­ing with 13-year lows be­low $30 in Fe­bru­ary-is not enough to “to trig­ger any sig­nif­i­cant up­turn in ex­plo­ration and de­vel­op­ment ex­pen­di­ture by the up­stream oil and gas in­dus­try,” Biswas said. Singapore’s ser­vices in­dus­try con­tracted 0.1 per­cent year-on-year and were down 1.9 per­cent from the pre­vi­ous quar­ter. Con­struc­tion re­mained a bright spot in the econ­omy, grow­ing 2.5 per­cent year-on-year and 0.5 per­cent from the pre­vi­ous quar­ter as the gov­ern­ment ramped up spend­ing. Singapore in Au­gust nar­rowed its full-year eco­nomic growth fore­cast to 1.0-2.0 per­cent from 1.0-3.0 per­cent as pro­jected pre­vi­ously. It grew 2.0 per­cent in 2015. — AFP

SINGAPORE: Peo­ple walk along the Ma­rina Bay next to the fi­nan­cial busi­ness dis­trict of­fice build­ings in Singapore yes­ter­day. Singapore’s ex­port­driven econ­omy shrank in the third quar­ter from the pre­vi­ous three months, the gov­ern­ment said yes­ter­day, as global trade re­mained sub­dued and lower en­ergy prices hurt the oil and gas ser­vices sec­tor. —AFP

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