Friday, January 05, 2007

Singapore experiences fastest economic growth in Q4 2006 despite lower electronics exports: what’s the outlook for 2007?

Singapore's economic growth unexpectedly accelerated to the fastest pace in a year as surging tourist arrivals and increased consumer spending helped offset lower electronics exports. Southeast Asia's fourth-largest economy grew an annualized 7.6 percent in the final three months of 2006, after expanding a revised 5.6 percent in the third quarter, the trade ministry said in a report. Economists expected a 4.1 percent gain.

Prime Minister Lee Hsien Loong wants to reduce Singapore's dependence on manufacturing and enhance the city's role as a regional financial services and tourism hub, boosting construction projects and lifting property prices for developers such as CapitaLand. Growth may slow this year as weaker global demand for electronics and a currency at a nine-year high takes the luster off the island's overseas shipments.
From a year earlier, Singapore's economy expanded 5.9 percent in the fourth quarter after growing a revised 7 percent in the previous three months, the government said. The economy grew 7.7 percent last year, PM Lee said on December 31.

PM Lee said in his New Year's message that the pace of expansion may ease in 2007 due to a U.S. economic slowdown and weaker global demand for electronics, which account for about half the $118 billion economy's exports. The economy may expand between 4 percent and 6 percent this year, PM Lee said.

Do you agree with PM Lee? Or will 2007 be a year of further surprises for Singapore’s economy? Will the SingDollar keep rising and weaken export receipts further? Will tourism numbers continue to bolster the economy?

Let us know what you think.