Monetary Authority of Singapore Annual Report 2010/2011
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Singapore: Record Growth in 2010

Following a mild contraction in the previous year, the Singapore economy recovered strongly in 2010 to grow by 14.5%, the fastest annual rate on record. (Chart 1) This turnaround outperformed the 6.6% average rebound in the aftermath of the Asian Financial Crisis, the dotcom bust and the 2003 SARS outbreak. By the end of Q4 2010, GDP levels had surpassed the pre-recession peak by 10%, marking a decisive exit from the Great Recession.

The economic expansion in 2010 was broad-based, with equal contributions from the manufacturing and services sectors. Strong growth momentum in the first half of the year largely reflected continued inventory restocking in the electronics sector, as well as recovery in the sentiment-sensitive industries in the financial sector. The cyclical upturn was also supported by a series of capacity expansions across both manufacturing and services, providing a boost in particular to pharmaceutical production and services activities tied to the two new Integrated Resorts (IRs).

Since the second half of 2010, growth in the Singapore economy has moderated. Cyclical support from the inventory restocking cycle started to fade in Q3, alongside a temporary pullback in pharmaceutical output. However, as the global recovery gained traction at the turn of the year, the domestic economy saw another step-up in activity, posting growth of 22.5% q-o-q SAAR* in Q1 2011. Manufacturing and trade-related services were supported by improving demand in key export markets, while growth in the financial sector was underpinned by firm activity in the intermediation and insurance industries. Meanwhile, tourism services were buoyed by increased visitor inflows from the region.

For the rest of 2011, underlying growth drivers are expected to remain broadly intact, although the expansion may be more moderate. Nevertheless, a protracted spike in oil prices, a deterioration in the Eurozone debt crisis, or a more widespread nuclear fallout in Japan could threaten global growth and dampen the outlook for Singapore.

*   As at 29 June 2011