Singapore mired in a manufacturing recession: Maybank

Manufacturing has shrank for the third straight quarter.

Maybank said that despite Singapore avoiding a technical recession as 4Q12 GDP expanded by 1.8% annualised qoq, the manufacturing sector saw a 10.8% shrinkage over the same period. Year-on-year, manufacturing contracted again, making it one of the worst-performing sectors overall.

Here's more from Maybank Kim Eng:

No “Technical Recession”. Singapore released the advance estimates for 4Q 2012 real GDP. The economy expanded +1.8% annualised QoQ, reversing the -6.3% contraction in 3Q 2012. YoY, the economy also grew last quarter, by +1.1% after a stagnant 3Q 2012.

But “Manufacturing Recession”. While the broader economy averted technical recession, it was pretty much a manufacturing recession as the sector shrank on the annualized QoQ basis for the third successive quarter by -10.8%. It also posted back-to-back YoY declines of -1.5%. Things were more mixed in other sectors. Construction activities dropped for the second quarter in a row by -8.9% annualised QoQ but rose +5.9% YoY. Services rebounded in 4Q 2012 to +7% annualized QoQ and +1.5% YoY (3Q 2012: -3.9% annualized QoQ; +0.2% YoY).

Singapore’s 2013 real GDP growth forecast trimmed, but improving from 2012. For the whole of 2012, growth slumped to just +1.2% (2011: +4.9%) mainly as global economic slowdown dragged manufacturing (2012: -0.2%; 2011: +7.6%) and services (2012: +1.2%; 2011: +4.4%) sectors while construction sector picked up (2012: +8.8%; 2011: +2.6%). We have lowered our forecast of Singapore’s 2013 real GDP growth to +3.0% from +3.8% previously. The official real GDP growth forecast for 2013 remains at 1% to 3%.

Based on a mildly better external demand environment. Global real GDP growth is expected to stabilise in 2013 at +3.4% after two consecutive years of slowdown i.e. +3.3% in 2012 and +3.8% in 2011 from +5.1% in 2010. At the same time, world trade volume (goods & services) is expected to expand by a faster clip of +4.7% in 2013 from +2.8% estimated for 2012. Crucially, key to the expected marginal improvement in external conditions include continued growth in the US economy as the “fiscal cliff” is averted and stabilisation in the Eurozone crisis, although China will cap the upside somewhat as its growth enters a moderate but sustainable pace on the back of domestic economic rebalancing and reforms. Given that net external demand account for 30% of Singapore’s GDP, a better relatively external environment will benefit the economy especially via the export-oriented manufacturing, wholesale trade, transport and storage sectors.