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Singapore extends growth runPosted by admininvest on: 2005-10-10 10:54:51
By Amit Prakash Bloomberg News MONDAY, OCTOBER 10, 2005 SINGAPORE The economy of Singapore expanded at an annualized 3.2 percent pace in the third quarter, the Trade Ministry reported Monday, following an 18 percent spurt in the previous three months. Growth was led by manufacturing, which accounts for a quarter of the $107 billion economy. From a year earlier, the economy expanded 6 percent, faster than the 5.2 percent in the second quarter, the ministry said. Stocks rose as investors bet that the nation's economic growth in 2005 would exceed the government's forecast of 4.5 percent. Singapore's shipyards and oil-rig contractors are winning orders as record energy prices prompt companies to increase investment. Sales are also rising for drug companies and electronics makers like Chartered Semiconductor Manufacturing. "Growth should accelerate next quarter and we expect the official forecast for the year to be raised," said Euben Paracuelles, an economist at DBS Group in Singapore. "We are seeing signs of electronics improving." "Demand in the third quarter seems to have rebounded and is quite strong," said Hobson Ng, chief executive of PCA Technology, which makes electronic parts for companies including Creative Technology and Seagate Technology, the world's largest maker of computer disk drives. "For the rest of the year, demand is expected to remain strong." Continued economic growth and rising inflation may prompt Singapore's central bank to stick to its policy of allowing a "gradual and modest" appreciation of its currency. The Monetary Authority of Singapore has maintained the policy since April 2004 as a stronger currency has helped to reduce the cost of oil and other imported goods. Singapore's inflation rate accelerated to an eight-month high in August, the government said. Crude oil futures on the New York Mercantile Exchange have risen 42 percent this year and touched a record of $70.85 a barrel on Aug. 30. "The economy has done quite well in the last two quarters and we are starting to see mild inflation," said Song Seng Wun, an economist at CIMB-GK Research in Singapore. "I expect the MAS to maintain its policy stance." The monetary authority has a policy of seeking to prevent the Singapore dollar from rising or falling outside an undisclosed band, based on a basket of the currencies of the city's biggest trading partners. It does not set interest rates. Manufacturing, which accounts for a quarter of the economy, rose 10 percent in the third quarter from a year earlier, as drug production surged 52 percent in August and transport engineering output gained nearly 28 percent. Manufacturing had expanded a revised 6.3 percent in the second quarter from a year earlier. Higher "pharmaceuticals output was the main reason for the manufacturing increase," said Ho Woei Chen, an economist at United Overseas Bank in Singapore. Gains in the last two quarters are "likely to lift the overall growth for the full year. Services and construction should pick up going forward." Keppel, the biggest offshore marine engineering company in Singapore, said Sept. 30 that it had won an order to build two oil drilling rigs for Scorpion Offshore for $180 million. A day earlier, one of its units won shipbuilding orders for six vessels totaling 78 million Singapore dollars, or $46 million. SembCorp Marine, the second-biggest Singaporean marine company, said Oct. 3 that it had secured a record 4.2 billion dollars of new contracts so far this year. Singapore makes 70 percent of the world's offshore oil rigs, Lim Swee Say, a minister in Prime Minister Lee Hsien Loong's office, said Sept. 28. The services sector, which includes wholesale and retail trade, banking, lodging and tourism, expanded 5.1 percent from a year earlier in the third quarter. Services had expanded a revised 5.1 percent in the second quarter. Service industries gained in the third quarter from higher tourist arrivals, which reached a record level in July when the International Olympic Committee met in Singapore to pick the host nation for the 2012 Summer Games. Visitor arrivals in July and August were nearly 20 percent higher than in the first two months of the previous quarter and were up 8.9 percent compared with a year earlier. Activity in the construction industry bucked the upward trend, however, shrinking 0.7 percent from a year earlier. It was the 17th quarterly decline in construction in the past 18 quarters. Monday's report was a preliminary estimate, largely based on data for July and August. Another report, based on more complete data, will be released in November, the ministry said. 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