SINGAPORE: Singapore’s trade-dependent economy grew by an estimated 2.1 percent in 2015, its worst performance since the 2009 recession, as global demand for Asian exports slumped, official data showed on Monday.
The gross domestic product (GDP) expansion figure, down from 2.9 percent in 2014, was based on advance estimates that GDP in the fourth quarter of last year rose 2.0 percent year-on-year.
The 2015 growth estimate was in line with the government’s latest revised forecast for GDP to expand “close to 2.0 percent.”
Singapore’s GDP contracted by 0.6 percent in 2009 during the global financial crisis, but rebounded the following year with exceptional growth of 15.2 percent.
The trade ministry has projected GDP growth of between 1.0 percent and 3.0 percent in 2016.
Singapore’s manufacturing sector, which makes up about a fifth of the economy, contracted 6.0 percent in the December 2015 quarter, marking its fourth consecutive quarterly decline.
In 2015, manufacturing sank 4.8 percent, the ministry said, because of weak demand for key exports like semiconductors and precision engineering products.
Demand for oil drilling rigs has also been dented as exploration activities dwindled because of the prolonged slump in crude prices.
Singapore is the largest manufacturer of jack-up rigs, accounting for 70 percent of the world market.
Construction and services cushioned the impact of the weak manufacturing sector in 2015.
Construction expanded 7.0 percent and services climbed 6.5 percent 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.