Singapore economy ready to rise


Singapore companies are big investors in electronics production in the neighboring Indonesian island of Bintan

Geoff Hiscock
CNN Asia Business Editor

SINGAPORE (CNN) -- Singapore's economy looks to have bottomed out after government figures released Wednesday show a 2.6 percent year-on-year contraction in the March quarter.

That compares with year-on-year falls of 6.6 percent and 5.4 percent in the December and September 2001 quarters respectively.

The pickup in the March quarter suggests Singapore is on track to see economic growth of at least 3.0 percent this year, Macquarie Bank regional economist Lilian Ong told CNN Wednesday.

She said the economy "clearly has troughed and is turning around".

In its East Asia regional update released Tuesday, the World Bank predicted growth for Singapore of 3.8 percent this year, increasing to 5.8 percent in 2003.

Sluggish demand for electronics

But the island republic's manufacturing sector is still in the doldrums as a result of what the government says is "sluggish demand" for electronics.

Singapore Ministry of Trade and Industry first-quarter advance estimates -- which are based on data for January and February only -- show the goods-producing sector contracted 6.1 percent year on year, while the services sector eased only 0.7 percent.

Ong told CNN that Singapore's recent economic performance showed how closely leveraged it was to the U.S. economy and the global cycle.

She said Singapore was seeking to "retool" its economy by moving into more high-value-added sectors such as biotechnology, media and information technology, but this would not be achieved in the short term.

Singapore's benchmark Straits Times index was down 19.3 points or 1.1 percent to 1734.95 by mid-morning Wednesday.