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Singapore's industrial output contracted on a yearly basis in June, after registering two months of growth, a report from the Economic Development Board showed Friday. Compared to May, output declined at a faster pace in June.
Industrial output dropped 9.3% year-on-year in June, reversing a 2.1% growth in May, and was also steeper than economists' expectations for a 6.4% fall. This was mainly attributed to a sharp slowdown in the growth from the biomedical cluster. In April, industrial output climbed 0.8% annually, ending six consecutive months of decline.
The biomedical output, which makes up for 22.2% of total output, grew at a much slower pace of 11.6% in June, after recording a 120.8% growth in May. At the same time, the decline in output continued in electronics, chemicals, precision engineering and general manufacturing, although at a slower pace. However, output of transport engineering dropped at a faster pace.
Month-on-month, industrial output shrank a seasonally adjusted 9.2% in June, faster than a 1.8% drop in the preceding month and above economists' expectations for a 6.2% decline. In the first six months, the industrial output was down 14% compared to the same period last year.
Despite the drop in output, there were signs that the Singapore economy was recovering. Earlier this month, the Ministry of Trade and Industry raised its economic outlook for 2009, forecasting the economy to contract at a slower pace this year. However, it said the outlook for the rest of the year remains subdued and susceptible to risks.
The ministry now expects the gross domestic product or GDP to contract by between 4% and 6% this year compared to its earlier forecast of a 6% to 9% contraction.
Preliminary official estimates showed that manufacturing output fell 1.5% year-on-year in the second quarter, much slower than a 24.3% drop in the first quarter, mainly due to improved performance of the biomedical sector and an increase in the electronics output due to inventory restocking. However, the ministry pointed out that the growth in these two sectors may not be sustained over the year.
Meanwhile, in a report released Thursday, the Asian Development Bank said the emerging East Asian economies, Singapore included, have already started to make the transition from recession to recovery. The ADB expects a V-shaped recovery for these countries, with growth slipping sharply this year, but rebounding at last year's pace in 2010.
Emerging east Asia includes all member countries of the Association of Southeast Asian Nations, as also the People's Republic of China, Republic of Korea and Hong Kong and Taipei,China.
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