Singapore's productivity rates in 2012 not very positive: Tan Chuan-Jin

SINGAPORE: Singapore's productivity rates in 2012 have not been very positive, said Acting Manpower Minister Tan Chuan-Jin.

Employment has grown much faster than GDP over the same period.

Replying to a question in Parliament on Tuesday, he explained that Singapore's target of two to three per cent productivity growth per annum is a stretched target, as most developed economies achieve an average of one to two per cent productivity growth per annum.

But if Singapore is able to hit the upper end of this range over the long term, the country will be in a good position to achieve higher wages for all Singaporeans and remain competitive at the same time.

Hence, there is a need to press on with efforts to restructure the economy.

Mr Tan said companies need to reduce their reliance on manpower, and workers need to continue upgrading themselves so that they can take on the higher value-added jobs created.

Singapore must also persist in the gradual tightening of foreign worker policy.

Mr Tan said: "While we focus on implementing the various sectoral productivity strategies well, we are also mindful not to lose sight of the reason why we are embarking on this productivity drive in the first place.

"At the end of the day, what we want to achieve is better incomes and better living standards for all Singaporeans in a sustainable way. And we believe that increasing productivity is the right way to do so, without jeopardising Singapore's competitiveness and our workers' livelihood.

"Data has shown that this is the right strategy, as the real wages of our workers have risen broadly in line with productivity improvements over the long term."

Mr Tan also said that Singapore has committed significant resources to the productivity drive, and there are numerous government support schemes available for companies to tap on.

One common feedback from companies is that because of the large number of productivity schemes available, it is not easy for them to navigate through all of them and determine which scheme suits them best.

"This is a challenge that we need to address," said Mr Tan. "The best designed schemes with the best intentions are not very helpful if no one makes use of them."

Therefore, the government is working to improve the accessibility of productivity schemes so that companies can tap on the help more effectively.

While many programmes are still in their initial phases, Mr Tan said take-up rates have been encouraging.

He shared the example of a new iSPRINT scheme which helped 1,800 SMEs invest in info-comm technology such as accounting and payroll systems.

Japan April-June GDP grows 0.3%

TOKYO: Japan's economy grew by 0.3 percent in the three months to June from the previous quarter, the government said Monday, the country's fourth consecutive rising quarter but at a slower pace than before.

The data from the Cabinet Office came in significantly weaker than market expectations for a 0.7 percent increase, as exports slowed due to weaker global growth amid the eurozone crisis.

It also marked a sharp contrast from a brisk 1.3 percent increase in the January-March period.

The government has taken a series of steps to spur growth, including offering incentives for fuel-efficient vehicle purchases and measures to rebuild the northern region hit by last year's deadly earthquake and tsunami.

But Japan's economy has faced headwinds caused by Europe's debt crisis, which has slowed growth worldwide, while a high yen has made Japanese exports less competitive in overseas markets.

Last week, the government downgraded its views on consumer sentiment and machinery orders, while the Bank of Japan effectively cut its assessments on exports and factory production.

S'pore Q1 GDP up 1.6% on-year

SINGAPORE: Singapore's economy grew 1.6 per cent on-year in the first quarter, compared to 3.6 per cent growth in the preceding quarter.

On a quarter-on-quarter basis, Singapore's economy grew by 10 per cent, reversing the 2.5 per cent contraction in the previous quarter. The figure was slightly higher than the 9.9 percent reported in Advance Estimates released last month.

Singapore is maintaining its economic growth forecast for 2012 at one to three per cent, amid uncertainty in the global economy.

The Ministry of Trade and Industry said any recovery in the global economy remains fragile and vulnerable to downside risks.

It also warned that a disorderly sovereign debt default in the eurozone could not be ruled out, and if it did happen, would pose considerable downsides for the global economy and Singapore's externally oriented industries.

The improved momentum was largely due to the upturn in the manufacturing sector. The sector grew 19.8 per cent on a quarter-on-quarter basis, rebounding strongly from the 11.1 per cent contraction in the previous quarter.

The construction sector, meanwhile, surged 32.1 per cent.

The wholesale and retail sector contracted 2.3 per cent in the first quarter. This weak performance was mainly attributable to a decline in re-export volume, which negatively affected the wholesale trade segment.

The finance and insurance sector contracted for the second time by 3.4 per cent, due to the sluggishness in fund management activities.

US credit rating gets cut again

WASHINGTON: A small credit ratings agency on Thursday downgraded the United States' credit rating for a second time, arguing the country was no closer to solving its runaway debt problem.

In a move that could foreshadow decisions from larger agencies, Egan-Jones downgraded the US to AA from AA+.

The company cited "the lack of any tangible progress on addressing the problems and the continued rise in debt to GDP."

"For the first time since WWII, US debt exceeds 100 per cent," analysts said, predicting that would rise to 106 per cent by the end of the year, calling that an "inflection point."

Egan-Jones -- which is much smaller than its rivals -- scrapped the United States' top-level AAA rating in July, one month before Standard & Poor's.

Part of the reason cited then and now was the continued political gridlock in Washington.

"We'd like to see some progress towards reducing the fiscal deficit in the next six to twelve months," said managing director Sean Egan.

Analysts more upbeat about 2012's outlook

Some private analysts said yesterday that the Government is being overly pessimistic by maintaining an overall growth forecast of 1 to 3 per cent this year amid a stream of positive data.

Analysts from Credit Suisse and DBS said full-year economic growth is more likely to come in at about 3.5 per cent.

The Ministry of Trade and Industry (MTI) said earlier yesterday that the macroeconomic outlook remains "subdued" and "clouded with significant uncertainties".

The United States' recovery will be curtailed by public- spending cuts and continuing weakness in the housing market, said MTI.

It added that European banks have tightened lending, which will weigh on private-demand growth in the economy.

As a result, MTI chose to stick to a cautiously optimistic full-year growth forecast.

The ministry warned that Singapore's full-year growth could be even lower than expected.

It pointed to key risks such as a disorderly default on sovereign debt in the euro zone and an oil-price shock arising from the escalation of tensions in the Middle East.

Credit Suisse economist Wu Kun Lung said: "The euro zone development remains a key risk, but our base-case scenario is that a break-up of the euro zone can be avoided or postponed beyond 2012."

OCBC economist Selena Ling said a global oil-price shock is "only a tail risk for now".

Still, MTI officials said at a media conference yesterday that Singapore needs to be prepared for "more twists and turns" and "greater volatility" in the external environment, and added that they are "comfortable" with the growth forecast of 1 to 3 per cent.

Singapore may avoid a technical recession - defined as two consecutive quarters of contraction - based on near-term economic indicators and the first trade data of the year, said MTI.

"We've started off with quite good trade numbers and it at least gives us a basis to build on," said Dr Thia Jang Ping, director of the economics division at MTI. "We're hopeful that we can do better."

Total trade and non-oil domestic exports (Nodx) growth for the whole of this year is still expected to fall between 3 and 5 per cent.

Singapore's total trade grew 8 per cent last year, while Nodx climbed 2.2 per cent. Latest figures on Singapore's growth in the final quarter of last year showed that the economy shrank less than forecast.

The 2.5 per cent quarter-on-quarter contraction was much lower that a forecast 4.9 per cent contraction, and helped to push up Singapore's full-year growth.

It translated to a year-on-year expansion of 3.6 per cent in the fourth quarter.

For the whole of last year, the economy expanded by 4.9 per cent, marginally higher than the 4.8 per cent forecast.

This was due mainly to a surge in biomedical manufacturing output, which helped offset a contraction in the electronics cluster and slower growth in both the precision-engineering and chemical clusters last year, said MTI.

"Electronics output declined in Q4 because of weak demand from Europe, while the chemicals industry was disrupted by a fire at Singapore's largest refinery," said Mr Leong Wai Ho, an economist with Barclays Capital.

Meanwhile, the finance and insurance sector saw a 9.1 per cent full-year growth on the back of continued expansion in domestic and offshore lending activities, even as stock-trading activities declined.

The accommodation-and- food services and other services industries, grew by 5.8 and 6.7 per cent respectively, on the back of healthy visitor inflows.

Still, last year's 4.9 per cent total growth represents a sharp moderation from the 14.8 per cent growth recorded in 2010.

DBS economist Irvin Seah said that pockets of risk remain in Europe. "We believe that the current poor economic conditions will prevail for a few more months before a more pronounced pickup in growth momentum materialises in the second half of the year," he said.

"The recovery in the US will likely gain momentum and a more solid resolution may be in sight in the euro zone by then.

"As a result, full year GDP growth in 2012 will likely come in at 3.5 per cent."

S'pore economy grows by 4.9% in 2011

SINGAPORE: The Ministry of Trade and Industry (MTI) announced on Thursday that the Singapore economy had grown by 4.9 per cent in 2011, after a 14.8 per cent expansion in 2010.

MTI also maintained the growth forecast for 2012 at 1.0 to 3.0 per cent.

The GDP numbers released Thursday have experts and officials agreeing that a recession for Singapore appears less than likely.

"Trade numbers give some hope that we will not slip into recession" said MTI director Thia Jang Ping.

Singapore's real GDP grew by 3.6 per cent on a year-on-year basis in Q4 2011, compared to the 6.0 per cent in Q3.

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted by 2.5 per cent, reversing the 2.0 per cent growth in the previous quarter.

On a year-on-year basis, the manufacturing sector grew by 9.2 per cent, slower than the 13.7 per cent growth in Q3.

On a sequential basis, the manufacturing sector contracted by 11.1 per cent, compared to a 11.0 per cent increase in the previous quarter. This was due to a decline across most manufacturing clusters.

The construction sector grew by 2.9 per cent on a year-on-year basis, a slight improvement from the 2.4 per cent growth in the preceding quarter. On a sequential basis, the sector contracted by 2.2 per cent (annualised) largely due to a decline in private residential and commercial building activities.

The wholesale & retail trade and transportation & storage sectors registered relatively weak growth of 0.9 and 2.4 per cent respectively on a year-on-year basis.

On a sequential basis, the wholesale & retail trade sector expanded by an annualised pace of 10.2 per cent, reflecting a pick-up in re-export activities. By contrast, the transportation & storage sector contracted by 2.9 per cent.

Growth in the finance & insurance and business services sectors were modest, at 3.5 and 1.9 per cent respectively on a year-on-year basis.

On a sequential basis, the finance & insurance sector declined by 4.4 per cent (annualised), dragged down by poor performance in the sentiment-sensitive segments such as fund management and stock broking.

Growth momentum in the business services sector picked up slightly to 2.4 per cent.

Singapore economy to slow to 3% in 2012: MAS survey

SINGAPORE - Singapore's economy will grow by 3.0 per cent in 2012, slowing from an expected 5.2 per cent in 2011 as the global economy and financial services sector cool, according to central bank's survey of private economists released on Wednesday.

The median forecast is at the upper end of the government's growth forecast range of 1-3 per cent for 2012.

The survey also expects the Singapore dollar to strengthen to $1.23 against the US dollar by the end of 2012 from an estimate of S$1.28 by the end of the year. It traded around $1.31 at 0300 GMT.

Asian economies have slowed in recent months, hurt by the euro zone debt crisis that has resulted in weaker demand for the region's exports.


The survey showed that growth in financial services sector in Singapore, which is one of Asia's biggest wealth management centre, is expected to slow to 4.2 per cent in 2012 from a forecast of 9.4 per cent in 2011.

According to the Monetary Authority of Singapore's (MAS) latest Survey of Professional Forecasters, economists now expect inflation in the city state to ease to 3.1 per cent next year from 5.1 per cent in 2011.

Singapore, like many Asian countries, is grappling with high inflation even as growth slows because of troubles in Western countries.

Economists in the survey have cut their forecast for this year's growth slightly to 5.2 per cent from 5.3 per cent in the previous survey in September.

Gross domestic product (GDP) growth in the October-December quarter of this year is now expected to be 4.4 per cent year-on-year, compared with 5.9 per cent in the previous survey.

For 2012, growth in financial services is expected to slow to 4.2 per cent from a forecast of 9.4 per cent in 2011.

Last month the Singapore government warned that the city-state's economy could contract in fourth-quarter growth, while 2012 GDP growth is likely to slow due to the weakness in the western economies.

Italy set to enter recession in 2012, says deputy minister

ROME (AFP) - Deputy Economy Minister Vittorio Grilli said on Sunday Italy was set to enter a recession in 2012, with Gross Domestic Product predicted to shrink by 0.4 to 0.5 per cent.

Italy's growth should level out again by 2013, he added during a press conference following the adoption by the cabinet of a draconian package aimed at pulling the country back from the brink of insolvency.

Stimulus package as S'pore braces for slower growth?

SINGAPORE - Singapore on Monday predicted sharply lower economic growth of 1.0-3.0 percent in 2012 amid an export slowdown and warned the situation could worsen if Europe's debt woes trigger a global crisis.

The figure is off the previous estimate of 2.5-3.5 percent and well down from the five percent predicted for 2011 as demand in the city-state's key export markets in Europe and the United States dries up.

"This does not factor in downside risks to growth, such as a worsening debt situation or a full-blown financial crisis in the advanced economies," the Ministry of Trade and Industry (MTI) said in a statement.

"Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected," it added.

The 2011 gross domestic product (GDP) forecast is a huge slowdown from the all-time high of 14.5 percent seen in 2010 when the economy was coming off a 0.8 contraction the previous year.

Singapore's trade-driven economy is regarded as a bellwether for Asia's exporters, which depend heavily on electronics and other manufactured shipments to North America and Europe for growth.

"It looks like the risk is towards the downside," Chua Hak Bin, a Singapore-based economist with Bank of America-Merrill Lynch, said of the implications of Singapore's forecast for the rest of Asia.

"The fact that the tech exports were weak will mean other Asian economies will also see tech exports being pulled down," he told AFP.

Asia's fate will depend to a large degree on whether Europe can contain its debt crisis which has engulfed large economies including Italy and Spain, according to Chua.

Singapore's GDP was valued at S$284.6 billion in 2010, and total trade was more than three times as large.

"The longer the European debt crisis drags out with no clear solutions, it will have a negative impact globally," said Selena Ling, an economist with Singapore's Oversea-Chinese Banking Corp.

"We are starting to see the impact come through."

The MTI said it expects Singapore's electronics industry and other sectors that rely heavily on overseas orders to remain under pressure despite support from Asia's better-performing economies.

Even the financial services sector will be affected by heightened uncertainties in the external environment, it added.

The forecast came as data released separately on Monday by the trade promotion body International Enterprise Singapore showed electronics exports tumbling 17 percent in the third quarter from a year ago.

The ministry's downbeat projections for 2012 came as it released third-quarter figures showing GDP grew 6.1 percent, an improvement from 1.0 percent in the second quarter.

Singapore is a significant producer of high-end telecommunications and computer-related parts shipped to the rest of the world as well as petrochemical and pharmaceutical products.

"Within the manufacturing sector, the electronics cluster is expected to register a lower level of output given the downturn in the global electronics cycle," the MTI said.

Analysts from Nomura financial services group said the government may step in with a stimulus package when the next budget is unveiled in February 2012.

"The size of the stimulus will likely depend on how the external situation unfolds from here... the likely path is such that the first half will be weak before showing some recovery in the second half when we expect the effects of the fiscal response to kick in," they said in a report.

Key lesson from Iceland crisis is 'let banks fail': analysts

REYKJAVIK - Three years after Iceland's banks collapsed and the country teetered on the brink, its economy is recovering, proof that governments should let failing lenders go bust and protect taxpayers, analysts say.

The North Atlantic island saw its three biggest banks go belly-up in the October 2008 as its overstretched financial sector collapsed under the weight of the global crisis sparked by the crash of US investment giant Lehman Brothers.

The banks became insolvent within a matter of weeks and Reykjavik was forced to let them fail and seek a $2.25 billion bailout from the International Monetary Fund.

After three years of harsh austerity measures, the country's economy is now showing signs of health despite the current global financial and economic crisis that has Greece verging on default and other eurozone states under pressure.

"The lesson that could be learned from Iceland's way of handling its crisis is that it is important to shield taxpayers and government finances from bearing the cost of a financial crisis to the extent possible," Islandsbanki analyst Jon Bjarki Bentsson told AFP.

"Even if our way of dealing with the crisis was not by choice but due to the inability of the government to support the banks back in 2008 due to their size relative to the economy, this has turned out relatively well for us," Bentsson said.

Iceland's banking sector had assets worth 11 times the country's total gross domestic product (GDP) at their peak.

Nobel Prize-winning US economist Paul Krugman echoed Bentsson.

"Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net," he wrote in a recent commentary in the New York Times.

"Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver," he said.

During a visit to Reykjavik last week, Krugman also said Iceland has the krona to thank for its recovery, warning against the notion that adopting the euro can protect against economic imbalances.

"Iceland's economic rebound shows the advantages of being outside the euro. This notion that by joining the euro you would be safe would come as news to the Spaniards," he said, referring to one of the key eurozone states struggling to put its public finances in order.

Iceland's example cannot be directly compared to the dramatic problems currently seen in Greece or Italy, however.

"The big difference between Greece, Italy, etc at the moment and Iceland back in 2008 is that the latter was a banking crisis caused by the collapse of an oversized banking sector while the former is the result of a sovereign debt crisis that has spilled over into the European banking sector," Bentsson said.

"In Iceland, the government was actually in a sound position debt-wise before the crisis."

Iceland's former prime minister Geir Haarde, in power during the 2008 meltdown and currently facing trial over his handling of the crisis, has insisted his government did the right thing early on by letting the banks fail and making creditors carry the losses.

"We saved the country from going bankrupt," Haarde, 68, told AFP in an interview in July.

"That is evident if you look at our situation now and you compare it to Ireland or not to mention Greece," he said, adding that the two debt-wracked EU countries "made mistakes that we did not make ... We did not guarantee the external debts of the banking system."

Like Ireland and Latvia, also rescued by international bailout packages and now in recovery, Iceland implemented strict austerity measures and is now reaping the fruits of its efforts.

So much so that its central bank on Wednesday raised its key interest rate by a quarter point to 4.75 percent, in sharp contrast to most other developed countries which have slashed their borrowing costs amid the current crises.

It said economic growth in the first half of 2011 was 2.5 percent and was forecast to be just over 3.0 percent for the year as a whole.

David Stefansson, a research analyst at Arion Bank, told AFP Iceland hiked its rates because it "is in a different place in the economic (cycle) than other countries.

"The central bank thinks that other central banks in similar circumstances can afford to keep interest rates low, and even lower them, because expected inflation abroad is in general quite (a bit) lower," he said.

S'pore economy expected to grow 5.0% in 2011

SINGAPORE: Releasing the advance GDP estimates for the third quarter on Friday, the Ministry of Trade and Industry (MTI) said that the Singapore economy is expected to grow by around 5.0 percent in 2011.

However, inflation is expected to hover at around 5 per cent in 2011, warned the Monetary Authority of Singapore (MAS) in a separate statement, before easing to 2.5-3.5 per cent in 2012.

As such, the MAS said it will continue with a policy of a modest and gradual appreciation of the S$NEER policy band.

By doing so, the MAS is guiding the Singapore dollar to appreciate at a slower pace, after the currency reached historic highs against the US dollar in July.

The MAS move takes into account estimates for Singapore's economy which saw growth of 5.9 per cent on a year-on-year basis in the third quarter of 2011.

On a quarter-on-quarter basis, the economy grew by 1.3 per cent, a reversal from a contraction of 6.3 per cent in the previous quarter.

MTI said the improved economic performance in the third quarter was mainly due to a pick-up in growth in the biomedical manufacturing cluster.

It also cautioned that growth could be weighed down by the softening global economic conditions for the rest of 2011.

It cited the electronics cluster as one area which is expected to remain weak due to the easing of global electronics demand.