Singapore yesterday said a severe recession was over after two straight quarters of growth and predicted the economy would expand by up to 5 percent next year.
Data from the Ministry of Trade and Industry showed GDP rose 14.2 percent in the July-to-September period on a quarter-on-quarter annualized basis after a 21.7 percent surge in the previous three-month period.
“Effectively, the recession in Singapore is over,” Secretary of the Ministry of Trade and Industry Ravi Menon said.
“Economies around the world are now turning the corner,” he told a news conference. “Singapore has benefited from these global and regional trends.”
Private sector economists said that Singapore sprang out of recession faster than many had predicted, but cautioned that the road ahead remained bumpy.
“Logically, if it’s been accelerating so fast for two quarters, don’t be surprised to see a deceleration in the fourth quarter,” said Alvin Liew, an economist with Standard Chartered Bank.
Year-on-year, Singapore’s GDP grew 0.6 percent in the third quarter compared with a 3.3 percent contraction in the April-to-June period, the ministry said in its third-quarter economic survey.
A recession is technically deemed over after two successive periods of quarter-on-quarter growth.
The 0.6 percent annual growth in the third quarter was the economy’s first positive showing since the third quarter of last year, when it slid into a recession.
Growth in the third quarter was powered by the manufacturing sector, which expanded 26.6 percent on a quarterly basis following a 58.5 percent surge in the April-toJune period, the ministry said.
Other sectors also turned in a positive performance, including services, which grew 10.8 percent after a 7.9 percent increase in the second quarter, it said.
The services sector — which includes wholesale and retail — makes up two-thirds of Singapore’s economy.
In its outlook for next year, the ministry forecast economic growth of between 3 percent and 5 percent, which would be a sharp turnaround from the existing projection of a contraction of between 2 percent and 2.5 percent this year.
“Global economic developments suggest that the recession has ended in most countries,” the ministry said in a statement accompanying the quarterly survey.
“Singapore’s economic outlook for 2010 will be closely linked to global conditions,” it said.
The US economy’s recovery from its recession will be key to Singapore’s growth prospects, the ministry said.
“The key economy to watch is the US. We see the recovery there continuing into 2010 but at a sluggish pace,” Menon said.
“We do not expect a collapse in US private demand, however ... but private demand will nonetheless be sluggish,” he said.
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