Annual Report 2000/2001
Economic Activity
[The Economy] [Monetary Policy in FY2000/2001] [External Environment] [Economic Activity] [Labour Market and Inflation] [Money and Credit] [Outlook for 2001] [Monetary Policy and Economic Research]
Strong External Environment Benefits Singapore Against the backdrop of a favourable external environment, the Singapore economy registered a strong cyclical rebound. Real Gross Domestic Product (GDP) grew robustly by 9.9% in 2000, following an expansion of 5.9% in 1999 and 0.1% in 1998. (See Chart 5.) The manufacturing sector was the key driver of the rapid pace of economic growth, underpinned by the strength of global electronics demand. The performance of the manufacturing sector, coupled with the recovery in the regional economies, contributed to the brisk activity in the services sectors, especially the commerce and transport and communications sectors. Only the construction sector remained weak, albeit recording a smaller contraction in 2000, compared to -8.8% in 1999. (See Chart 6.)
The financial services sector picked up in 2000, partly as a result of the financial liberalisation initiatives, with insurance and investment advisory segments recording double-digit growth rates. Bond market and Initial Public Offering (IPO) activity helped boost fees and commissions earned by commercial banks, while the performance of the stockbroking and foreign exchange trading segments remained lacklustre.
Domestic Output Moderated
In late 2000 and early 2001 however, external demand growth slowed markedly. The sharp downturn in demand in the global electronics market put a drag on Singapore’s electronics output, while the overall weakening of external economic conditions contributed to slower growth in the services sectors. In the commerce sector, both entrepot trade and domestic retail sales registered lower growth in the last quarter of 2000 and into 2001, while the hotel and restaurant industry saw sluggish revenue expansion, reflecting cautious consumer sentiments and a slowdown in visitor arrivals. Growth in the transport and communications sector also moderated, affected largely by the downturn in global electronics trade as well as competition from regional ports. Nevertheless, the communications industry continued to benefit from the spin-offs generated from the liberalisation of the telecommunications sector since April 2000.
