Singapore declares its recession over

“Effectively, the recession in Singapore is over,” said Ravi Menon, the permanent secretary of the Ministry of Trade and Industry (MTI). “Economies around the world are now turning the corner,” he told a news conference. “Singapore has benefited from these global and regional trends.”

Private-sector economists said Singapore sprang out of recession faster than many had predicted, but cautioned the road ahead remained bumpy.

“Logically, if it's been accelerating so fast for two quarters, don't be surprised to see a deceleration in the fourth quarter,” said Alvin Liew, an economist with Standard Chartered Bank.

Year-on-year, Singapore's GDP grew 0.6 percent in the third quarter compared with a 3.3 percent contraction in the April-June period, the MTI said in its third-quarter economic survey.

A recession is technically deemed over after two successive periods of quarter-on-quarter growth.

The 0.6 percent annual growth in the July-September period was the economy's first positive showing since the third quarter of 2008, when the city-state slid into a recession.

Growth in the third quarter was powered by the manufacturing sector, which posted expansion of 26.6 percent on a quarterly basis following a 58.5 percent surge in the April-June period, the ministry said.

Other sectors also turned in a positive performance including services, which grew 10.8 percent after a 7.9 percent increase in the second quarter, it said. The services sector, which includes wholesale and retail, makes up two-thirds of the economy.

In its outlook for 2010, the ministry forecast economic growth of 3.0-5.0 percent, which would be a sharp turnaround from the existing projection of a contraction of 2.0-2.5 percent this year.

“Global economic developments suggest that the recession has ended in most countries,” the ministry said in a statement accompanying the quarterly survey.

“Singapore's economic outlook for 2010 will be closely linked to global conditions.”

It was the first time that the ministry has put out a growth forecast for 2010.

Former Prime Minister Lee Kuan Yew, now a senior cabinet adviser, had said earlier this month the economy was likely to expand 3.0 percent next year.

The city-state's trade-reliant economy was the first in Asia to sink into a recession last year as the global downturn hit demand for its exports, especially from the United States.

Its worst recession since gaining independence in 1965 took place in 2001 when GDP shrank 2.4 percent.

The U.S. economy's recovery from its recession will be key to Singapore's growth prospects, the ministry said.

“The key economy to watch is the U.S. We see the recovery there continuing into 2010 but at a sluggish pace,” said Menon.

“We do not expect a collapse in U.S. private demand, however... but private demand will nonetheless be sluggish,” he said.

The U.S. economy, a major market for Asia's export-led economies including Singapore, has emerged from a prolonged recession that started in late 2007 as its GDP grew 3.5 percent in the July-September period.

It was the world's largest economy's first economic expansion since the second quarter of 2008 but analysts have cautioned the recovery remains fragile.

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