Activity increased in most sectors in 2006. An exception was the domestic electronics industry. Sluggish demand and excess inventory in the global market led to a dip in domestic semiconductor output, while the consumer electronics segment also slowed.
However, the weakness in the electronics industry was offset in part by a robust showing in the non-electronics manufacturing segment, on the strength of the biomedical and transport engineering clusters. The financial services sector also grew strongly, reflecting continued gains in the emerging wealth management industry as well as a recovery in domestic credit activity. (See Box 7 on page 35 for a discussion on the contribution of emerging clusters in the financial services sector.) Both the tourism-related and domestic-oriented services also fared well, boosted by a record number of visitor arrivals to Singapore. The domestic economy continued to post steady growth into early 2007, reflecting expansions across a broad range of industries.
For the rest of the year, the non-IT industries will remain a key pillar of support for the economy. Indeed, the services-producing industries have continued to do well. Entrepôt trade services have seen tentative signs of improvement in the early months of 2007, alongside the pickup in electronics re-exports. In addition, the domestic-oriented and tourism-related services clusters are also projected to see steady gains, in light of favourable conditions in the domestic labour market and further economic expansion in the region. Meanwhile, non-electronics manufacturing will benefit from sustained demand in the transport engineering and biomedical clusters.
However, some weakness in the IT-related industries is expected, due in part to lingering excess inventories in the semiconductor segment. Overall growth should pick up in the latter half of the year, reflecting th
e recovery in the IT-related industries, which will reinforce the steady growth momentum in the non-IT sectors. Barring any shocks, overall GDP growth in the economy is expected to come in at 5% to 7% in 2007.