SINGAPORE: Singapore's economy shrank at an annualised rate of 5.8% in the first quarter, a contraction about seven times bigger than markets expected and the weakest performance since the SARS health scare of 2003.
Yesterday's seasonally adjusted fall added to an outside risk that the central bank might end its year-old tightening stance and ease policy at its semi-annual review today.
But a Reuters poll of 11 analysts after yesterday's data found that more than two-thirds expect the Monetary Authority of Singapore to stick to its policy of allowing “a modest and gradual appreciation” of the trade-weighted Singapore dollar.
The government said the economy's contraction reflected a slowdown in biomedical manufacturing in Singapore, an important Asian base for multinational drug firms such as Pfizer Inc, Novartis AG, and ScheringPlough Corp.
The government had forecast in March that biomedical output would be flat in 2005, after growing 40% in 2004, as pharmaceutical makers face pressure from generic drug firms.
“If manufacturing does not recover, the likelihood is for the second quarter to show very marginal growth,” said Wong Keng Siong, economist at the Bank of Tokyo Mitsubishi.
The drop in GDP - the total value of all goods and services in the economy - compared with an annualised 0.8% contraction forecast by analysts polled by Reuters and 7.9% growth in the fourth quarter of 2004. It was the weakest quarter since the April-to-June period of 2003, when GDP shrank by an annualised 8.4% because of an outbreak of the deadly Severe Acute Respiratory Syndrome virus.
The economy grew by 2.4% in the year through the first quarter, the Ministry of Trade and Industry said in its advance estimates, which are based on data largely from January and February. Economists had expected growth of 3.5%. – Reuters
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