SINGAPORE, JULY 11.It is all about downturns and slowdowns. The news emanating from South-East Asia on the economic front is not good.
Yesterday, the Singapore Government downscaled its GDP growth forecast
for 2001 at 0.5 to 1.5 per cent from 3.5 to 5.5 per cent - the second
downward revision. Last year, the Singapore Government grew by a
robust 9.9 per cent but the authorities here have been warning of an
imminent slowdown which is now upon Singapore.
show that Gross Domestic Product (GDP) in the second quarter grew by
0.8 per cent in real terms over the same period last year. On an
annualised quarter-by- quarter basis, real GDP declined by 10.1 per
cent, an official statement said.
Goods-producing industries are estimated to have contracted by 6.6
per cent. The manufacturing sector declined in the second quarter, due
largely to the drop in global demand for electronics, while the
construction sector recorded flat growth, it said. Explaining the
rationale for revising the GDP growth downwards, the statement
referred to the sharp slowdown in major economies.
U.S. growth in
the first quarter was only 1.2 per cent, as companies run down
inventories in the midst of a sharp drop in demand. Second quarter
performance is expected to be worse. While there are tentative signs
of a recovery, the outlook of the U.S. economy remains uncertain.
More significantly, Singapore's economy is more closely linked to
the U.S. technology sector than the general economy. Due to the huge
excess capacity built up over the boom years, this sector is weaker
and will take longer to recover, the statement added. Mr. David
Cohen, director of economic forecasting at Standard & Poors, was
quoted by The Straits Times as saying that the current downturn
worse than 1998 and predicted that the Singapore economy would
contract by 0.5 per cent this year.
However, the problem is not just with Singapore. Indonesia and the Philippines have also revised their 2001 GDP forecasts downwards. In the case of Indonesia, it is down to 3.25 to 3.75 per cent from 5 per cent, while for the Philippines it now stands at 3.3 to 3.8 per cent. It is not just South-East Asia, but North-East Asia as well. Hong Kong, Taiwan and South Korea, too, have also revised their expected GDP growth rates for 2001 downwards.