SINGAPORE, Nov 16 (Reuters) - Singapore cut its growth forecast for this year to around 1.5 percent and warned of a subdued 2013 on Friday as updated third-quarter data and October export numbers showed weakness in electronics manufacturing and financial services.
The trade-dependent economy is expected to grow 1-3 percent next year, with risks on the horizon from the U.S. fiscal cutback and the eurozone crisis, the Ministry of Trade and Industry (MTI) said in a statement.
“Growth could come in slightly below 1.5 percent, should weakness in externally oriented sectors continue into the final quarter of 2012,” Ow Foong Pheng, permanent secretary at MTI, said at a press conference.
The new growth outlook for 2012, at the lower end of an earlier 1.5 to 2.5 percent forecast, came as the government revised third quarter gross domestic product to show a far steeper contraction of 5.9 percent from the previous quarter on a seasonally adjusted and annualised basis.
The government’s advance estimate was for a 1.5 percent contraction, while economists polled by Reuters expected the economy to have shrunk 2.9 percent quarter-on-quarter.
The economy grew 0.3 percent in the third quarter from a year earlier, the government said, slower than the advance estimate of 1.3 percent and forecasts of 0.9 percent.
“It’s a pretty bad number. The downward revision is almost more than three times the advance estimate, so it tells you how difficult it is to make accurate forecasts in such an environment,” said Citigroup economist Kit Wei Zheng.
“All-in-all it suggests par growth conditions (for 2013) but not necessarily so bad to the point of it being recessionary, just pretty slow and sluggish.”
Growth in the first and second quarters were revised upwards to 1.6 and 2.5 percent, respectively.
The government said non-oil domestic exports rose 7.9 percent in October from a year earlier, far better than the forecast of 3.1 percent in a Reuters poll.
International Enterprises Singapore said separately it now sees non-oil domestic exports growing just 2-3 percent this year, down from its previous forecast of 4-5 percent.
Singapore’s manufacturing slumped a seasonally adjusted and annualised 9.6 percent in the third quarter from April-June, while financial services shrank 4.6 percent. Manufacturing was flat in the second quarter while financial services grew an annualised and seasonally adjusted 2.9 percent quarter-on-quarter.
Wealthy Singapore, a major Asian business centre whose trade is three times the size of its economy, has been rocked by problems in the West that have crimped demand for its exports and hurt financial services.
With around 1.5 percent growth this year, Singapore will lag neighbours such as Indonesia and Malaysia that can count on larger domestic markets.
Indonesia’s central bank last week said it expected economic growth of 6.3 to 6.7 percent next year as strong domestic demand and investment largely offset the impact of weak exports.
“I will characterize the outlook still in the soft patch, some signs of stabilisation and we won’t get a full recovery until the risks are resolved,” said Sim Moh Siong, currency strategist at Bank Of Singapore. (Reporting by Kevin Lim, Rachel Armstrong, Anshuman Daga, Saeed Azhar and Charmian Kok; Editing by John O‘Callaghan and Eric Meijer)