Singapore's manufacturing production unexpectedly declined in August, raising fears of a recession as a gain in the biomedical sector was offset by a marked contraction in electronics output amid further deterioration in export demand, latest data showed Wednesday.
Manufacturing output dropped 2.2 percent annually, following a 2.5 percent gain in July, data from the Singapore Economic Development Board showed. Economists had forecast a 1 percent growth. Output declined for the first time in four months.
The electronics cluster recorded a faster decline of 7.3 percent than 5.3 percent in July as external demand for electronic products dropped further in the backdrop of a slowing global economy and the ongoing crisis in Europe.
Biomedicals output advanced 13 percent from a year earlier, led by the pharmaceuticals segment which grew 13.6 percent. Excluding biomedical manufacturing, output decreased 5.4 percent in August, data showed.
Production in chemical industries grew 6.6 percent annually, while the precision engineering cluster logged 3.8 percent gain. Output in the transport engineering sector was lower by 20.1 percent compared to last year, the agency said.
Compared to July, the seasonally adjusted manufacturing output declined 2.3 percent in August. Economists had forecast output to remain flat after falling 8.7 percent in July. Excluding biomedical output, production fell 2.7 percent.
The latest exports data had raised fears that the trade-driven economy may fall into a technical recession, which is two successive quarters of contraction, in the third quarter. The manufacturing figures have added fuel to such concerns.
Singapore's non-oil domestic exports declined a bigger-than-expected 10.6 percent year-on-year in August due mainly to decrease in both electronic and non-electronic shipments. Electronics exports fell 11 percent in contrast to the 2 percent growth in the previous month.
The economy contracted 0.7 percent quarter-on-quarter in the second quarter following 9.5 percent growth in the first quarter. The pull-back in growth was largely due to the decline in externally-oriented sectors.
The government has lowered its GDP growth forecast for 2012 to 1.5-2.5 percent from the originally estimated 1-3 percent.
Earlier this month, economists surveyed by the Monetary Authority of Singapore also downgraded the growth forecast for this year to 2.4 percent from 3 percent. Non-oil domestic exports are seen growing 4.2 percent this year compared to the previous prediction of 5.6 percent.
by RTT Staff Writer
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