SINGAPORE'S economy grew 2.2% in 2002 but may not fully recover until 2004, Prime Minister Goh Chok Tong said yesterday, suggesting the city-state might have escaped recession in the 4th quarter.
However, Singapore faced structural unemployment, growing competition from China and an uncertain global economy as war in Iraq approached, Goh said in his annual New Year's address.
“Nevertheless, there is a reasonable chance that 2003 will be better than 2002,” he said. “But most likely, we will have to wait until 2004 for a full recovery. If war does break out, its impact on the world and on us will depend on whether it is quick or protracted, and on how the Muslim world reacts. Until these questions are answered, the global economy will remain uncertain.”
Analysts said growth of 2.2% for the full year did not guarantee that the prosperous city-state escaped recession, technically defined as two straight quarters of contraction.
“I would say it's a very close shave...anything beneath 2.3% puts you in a possibility of a technical recession,” said Joseph Tan, economist with Standard Chartered Bank.
Goh's 2.2% estimate implied virtually zero growth in the 4th quarter against the 3rd quarter's surprise annualised 10.1% contraction.
Tan said the probability of recession would be clearer when the government releases an advance estimate of gross domestic product (GDP) for the 4th quarter tomorrow.
Singapore awoke to the risk of another recession after the GDP shrank in the 3rd quarter on a drop in global demand for the high-tech exports at the core of its economy, prompting the government to slash its full-year growth forecast to 2%-2.5% from 3%-4%.
Goh said that had the 2nd half not been dampened by US corporate scandals and the possibility of war in the Middle East, growth in 2002 would have been higher. – Reuters