SINGAPORE: Construction boom may offset lower exports
The economy expanded by a faster-than-expected year-on-year rate of 5.9% in the fourth quarter of 2006, taking growth for the year to 7.7%, the Ministry of Trade and Industry said today. Quarterly growth in manufacturing, which accounts for one quarter of the economy, was strong at 7.3%, although this was down from 10% in the previous quarter. The sector recorded annual growth of 11.4%. However, it remains vulnerable to a downturn in demand for exports in the coming months. Over the year, services expanded by 6.9%, while construction grew by 1.1%, its first increase since 2000. Efforts to develop tourism and gambling resorts have fuelled a construction and property boom and this may offset the impact of a downturn in the global economy.
Our judgement
Annual economic growth is expected to slow from 7.7% to 4.0-6.0% this year, although much depends on the global economic environment. Nevertheless, the fall reflects cyclical movements rather than a fundamental problem within the economy, and the overall medium term outlook is largely positive.
See SINGAPORE: Economy poised for slowdown - December 1, 2006.