SINGAPORE, Nov 21, 2011 (AFP) - 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.
"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 releasing the data.
|AFP - This file picture taken on January 22, 2009 shows motorists travelling over the bridge against the view of Singapore skyline.|
"Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected," it added.
The city-state's 2011 gross domestic product (GDP) growth is estimated at 5.0 percent, down from an all-time high of 14.5 percent in 2010 when the economy was coming off a 0.8 contraction during the 2009 recession.
Singapore's open and 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 Sg$284.6 billion ($219 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.
"Although resilient domestic demand in emerging Asia will provide some support to global demand, it will not fully mitigate the effects of an economic slowdown in the advanced economies," the MTI said.
Even the financial-services sector will be affected by heightened uncertainties in the external environment, it added.
The forecast came as data released separately 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.
"This in turn will have knock-on effects on the precision engineering cluster and wholesale trade."