Fears escalate as Singapore likely suffered from a technical recession in 3Q12

Blame it on NODX and industrial production figures that fell 9.1% and 2.3% respectively.

According to DBS, the economy contracted in 2Q12 by 0.7% (QoQ, saar) after a 9.5% surge in the first quarter. The risk of a second contraction in 3Q has risen significantly with weak non-oil domestic exports (NODX) and industrial production figures in recent months.

Here's more from DBS:

August NODX fell 9.1% (MoM, sa) following a 3.6% drop in July. Separately, industrial production fell 8.7% (MoM, sa) and 2.3% in July and August respectively.

Excluding the biomedical segment, manufacturing output fell by an average of 3.3% (MoM, sa) for the last three months. Other indicators are also pointing to a rough patch ahead for the economy. Singapore’s Purchasing Manager Index (PMI) as well as the PMIs of key markets have been sliding toward contraction territory (<50).

The SEMI book-to-bill ratio dipped to below parity, signalling a cyclical decline in the global electronics industry. While the manufacturing sector will bear the brunt of the global slowdown, the services sectors will not be spared. Overall, we expect GDP to contract by 1.0% (QoQ, saar) in 3Q12, which would make for technical recession, the first since 2008/09.

We now expect full year average GDP growth of 1.8%, compared to 2.5% previously envisioned. Owing to a slow global environment, we have also revised our 2013 growth forecast down to 3.2% from 3.7% previously.

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